BA-owner IAG says considering making offer for Norwegian Air Shuttle

BA-owner IAG says considering making offer for Norwegian Air Shuttle

British Airways parent company International Airlines Group (IAG) is considering buying budget air carrier Norwegian Air Shuttle, in which it recently acquired a 4.6% stake, to increase its presence in the low-priced market.

International Airlines Group says it has acquired 4.61% of Norwegian Air Shuttle "to establish a position from which to initiate discussions, including the possibility of a full offer for Norwegian".

However, IAG clarifies that to date "has not had discussions for this possible operation, has not made any decision on formulation of an offer of acquisition at this time and that re is no certainty as to wher such a decision will be made".

Norwegian said in its statement on Thursday (April 12) that it had no prior knowledge of IAG's actions, but welcomed the investment.

Norwegian also released a statement, saying: "IAG's interest in the company confirms the sustainability and potential of our business model and global growth".

Norwegian Air Shuttle has rocked the long-haul market with offers like US$140 tickets from Edinburgh to NY.

Some of its most popular deals have included £69 flights to New York, Providence and Hartford in the United States, though it's cheapest at the moment is around £120.




Norwegian is one of the few low-priced airlines to venture into long-haul flights, which has always been the preserve of major carriers, and has been rapidly adding flights.

Shares in Norwegian, which has been in trouble following a rapid expansion in recent years, rose by 25 per cent in Oslo on the announcement.

The purchase of Norwegian would benefit IAG's British Airways gain a bigger share of the low-priced market.

The buy-up caught Norwegian by surprise.

Even after Thursday's rally, Norwegian's founder and top owner, CEO Kjos who controls a quarter of the company's shares, is expected to demand a significantly higher price before selling, said Korsvold.

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

Last month Aer Lingus launched its 14th transatlantic route with service between Dublin and Philadelphia that will be followed by a new Seattle link next month.

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