International Airline Group (IAG), the company which owns British Airways has bought a stake in the rapidly expanding budget airline, Norwegian Air.
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Although Norwegian Air has reported, they were unaware of the acquisition until today, the owners of British Airways may make a full bid for the airline.
Shares in Norwegian Air Shuttle have soared by 37 per cent according to Bloomberg after IAG referred to the potential investment as an “attractive investment.”
Norwegian have reported that they have not held talks with IAG, but that interest in bidding for the airline “confirms the sustainability and potential of our business model and global growth.”
In a statement released by IAG, the company said: “The minority investment is intended to establish a position from which to initiate discussions with Norwegian, including the possibility of a full offer.”
According to Bloomberg, IAG will use the 4.61 per cent stake in the budget airline to “initiate discussions with the Norwegian.”
Taking over Norwegian would rid the company of a rival that entices customers with its low, long-haul flight prices.
The purchase of Norwegian would allow IAG to “a fleet with some of the newest fuel-efficient jets” Bloomberg explained.
IAG, which already owns the budget airline, Aer Lingus, the flag carrier airline for Ireland, is said to have “pounced” after keeping a watchful eye on the Nordic airline for the past few months.
The Nordic airline went on to add: “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.”
According to the Independent, Norwegian Air Shuttle has become the third biggest budget airline in Europe.
Second only to UK airline carriers easyJet and Ryanair.
However unlike the low-cost UK airlines, Norwegian has expanded into budget long-haul flights.
A large percentage of these flights depart from Gatwick to the US, but flight routes also include Buenos Aires and Singapore.
The airline launched in 1993 by Bjorn Kjos, a former fighter pilot who remains chief executive.
The announce of the potential bid for Norwegian Air Shuffle follows the BA announcement yesterday for lower flight prices for long-haul passengers.
British Airways passengers have introduced a “basic fare” for passengers of 10 flight routes.
In the hope of appealing to a broader range of passengers, the new cheaper fare will restrict passengers to hand-baggage only and could lower flight prices by up to £60.
Adam Daniels, British Airways’ chief commercial officer, said: “We know that when our customers travel with us, their needs vary from trip to trip – some will be flying on business, some for leisure, some will be on short hops, others will be longer stays.
“We need to ensure that the fares we provide reflect those differing needs so customers can select the best option for them on that occasion.
“Someone travelling for a short meeting or leisure break, who isn’t planning to check in a bag and is happy for us to allocate them a seat, will appreciate the option to secure a lower fare.