Published: Fri, April 13, 2018
Markets | By Noel Gibbs

British Airways parent IAG eyeing a bid for Norwegian Air

British Airways parent IAG eyeing a bid for Norwegian Air

International Airline Groups (IAG), the owner of Aer Lingus and British Airways, has acquired a 4.6pc ownership position in low-priced carrier Norwegian.

The statement indicates that the company bought an ownership position of 4.61 percent, which allows IAG to initiate discussions with Norwegian, "including the possibility of a full offer" for the Nordic carrier.

Shares in the struggling budget airline jumped 37pc following initial reports of IAG's approach, with the company now valued at $1.22bn (€1bn).

Norwegian Air Shuttle
GETTYNorwegian Air Shuttle has a reputation for cut-price flights

"Norwegian had no prior knowledge of this acquisition before it was reported by the media mid-morning Thursday", the carrier said in its own statement.

A spokesman for Norwegian did not comment on the airline's stance towards a takeover bid, but said that IAG's interest "confirms the sustainability and potential of our business model and global growth". March also saw low-priced subsidiary LEVEL begin a new route from Barcelona to Boston, and in July the airline will start operations from Paris-Orly to Montreal, New York (Newark), Guadeloupe and Martinique.

IAG, formed by the merger of Iberia and British Airways, has used acquisitions to grow in the past, adding Aer Lingus and Spain-based low cost carrier Vueling to its portfolio in 2015. Since launching its first long-haul services in 2013, the airline has become a major player in the transatlantic aviation business, offering low-priced fares to the US.

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Fast-growing Norwegian was forced to raise new equity in March to help fund its expansion and cope with higher fuel costs after warning of a larger than expected loss in the current quarter.

EasyJet was up 2%, Ryanair up 1.7% Wizz Air 3% after IAG confirmed its position with Norwegian, however.

IAG said it had noted recent press speculation that it is considering making an offer for Norwegian.

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Norwegian Air has expanded rapidly over the last 12 months, ordering new aircraft to serve a raft of new routes.

IAG's interest in Norwegian would see a wave of consolidation in European air travel which started a year ago extend its reach to long-haul travel.

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