IAG considering bid for budget carrier Norwegian

IAG considering bid for budget carrier Norwegian

IAG considering bid for budget carrier Norwegian

British Airways owner International Airlines Group (IAG) has confirmed that it is exploring a potential acquisition of low-priced carrier Norwegian Air Shuttle.

IAG confirmed it had bought a minority stake in the airline in order to establish a starting point for discussions but said there was "no certainty" a deal would be made.

Shares in Norwegian Air - which is reportedly worth $1.2bn (£845m) - soared by 37% following Thursday's announcement.

For its part, Norwegian noted that "had no prior knowledge" of acquisition of 4.6% of its capital by IAG, before it communicates today mid-morning this purchase to regulator. "Norwegian believes that interest from one of the largest worldwide aviation groups demonstrates the sustainability and potential of our business model and global growth", the company said in a press release.

A trailblazer of low-priced long-haul flying in Europe, Norwegian has been leading the charge to eat into the trans-Atlantic market where traditional full-service carriers like British Airways have historically made most of their profits. With LEVEL's launch IAG now has five main airline brands, including Aer Lingus, British Airways, Iberia and Vueling. In the long haul low-priced segment, both NAS and LEVEL started recently and the combination of both carriers and its short-haul counterparts could generate an interesting offering of connections for intercontinental travelers.

Norwegian's shares were halted by the Oslo bourse but had earlier risen by 18.3 percent to 212.1 crowns, valuing the company at 8.06 billion Norwegian crowns ($1.04 billion).

London-listed International Airlines Group (IAG) revealed the news in a brief statement in which it noted press speculation over a possible bid for Europe's third largest low-priced carrier after Ryanair and Easyjet. IAG shares were flat.

IAG has taken a 5pc stake in Norwegian with a view to launching a full takeover bid.

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.

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