BRITISH AIRWAYS’ PARENT COMPANY BUYS SHARES IN NORWEGIAN AIR, SPARKING TAKEOVER BID RUMOURS
Category:NewsShares in Norwegian, the rapidly expanding low-cost airline, have soared by one-fifth after IAG called its rival an “attractive investment” and sparked rumours of a possible takeover bid.
IAG, which owns airlines including British Airways, Aer Lingus and Iberia of Spain, has already bought 4.61 per cent of Norwegian Air Shuttle ASA. In an announcement, IAG said: “The minority investment is intended to establish a position from which to initiate discussions with Norwegian, including the possibility of a full offer.
The conglomerate stressed that no such discussions have taken place, that no decision had been made to make an offer, and “there is no certainty that any such decision will be made”.
“A further announcement will be made if appropriate,” said IAG.
Shares in Norwegian soared from €18.70 to €22.59, an increase of 21 per cent, while IAG’s share price initially dipped but then recovered.
A spokesperson for the Oslo-based airline said: “Norwegian has just been made aware that the International Airline Group (IAG) has acquired of 4.6 percent of the shares in Norwegian Air Shuttle ASA.
“Norwegian had no prior knowledge of this acquisition before it was reported by the media mid-morning Thursday.
“Norwegian has not been in any discussions or dialogue with IAG about the matter. Norwegian believes that IAG’s interest in the company confirms the sustainability and potential of our business model and global growth.”
Norwegian was created in 1993 by a former fighter pilot, Bjorn Kjos, who remains its chief executive.
It has grown to become Europe’s third-largest budget airline, behind Ryanair and easyJet.
Unlike its giant rivals, Norwegian has a big and expanding low-cost, long-haul operation, with a large route network at Gatwick — mainly to the US, but also including Buenos Aires and Singapore.
It has also launched transatlantic flights from Barcelona, the base for IAG’s Vueling subsidiary. In response, IAG set up Level, a low-cost, long-haul airline that flies many of the same routes.
Norwegian has also been cited by British Airways as a benchmark for costs on long-haul routes from Gatwick. BA is “densifying” its Boeing 777 fleet at the Sussex airport in order to become more competitive. In addition, on Wednesday it launched “Economy Basic” fares designed to compete with Norwegian’s offering.
A takeover would also strengthen IAG’s competitive position against low-cost, short-haul rivals, notably easyJet and Ryanair.
Mr Kjos recently told The Independent: “You will always see airlines come and go. Mostly you will see them go.”
Source : INDEPENDENT
