International Airlines Group – the parent company of British Airways and Iberia – quietly purchased a four percent share in low-cost carrier Norwegian Air, leading to speculation a takeover could be in the works. The conglomerate is neither confirming nor denying the rumors, saying the current purchase is “an attractive investment” and “a position from which to initiate discussions.”
It could be a case of “if you can’t beat them, join them” at International Airlines Group (IAG), as the conglomerate is expanding their investment portfolio into other airlines. In a press statement, the company confirmed taking a 4.61 share of ownership in low cost trans-Atlantic carrier Norwegian Air.
The story was first posted to the FlyerTalk forums early Thursday morning, confirmed by articles from Bloomberg and Reuters. According to the Reuters report, IAG could be in talks to outright buy the carrier, currently valued at $1.2 billion.
Adding another airline to the portfolio is not out of character for IAG. In 2015, the corporation purchased Irish airline Aer Lingus, reportedly beating Ryanair in a bidding war. Although Aer Lingus did adopt Avios as their frequent flyer program of choice, they opted not to join the oneworld alliance with sister airlines British Airways and Iberia.
On the rumors of a potential takeover, IAG is not necessarily distancing themselves from the idea of purchasing the carrier. In the same statement, the company called the airline “an attractive investment,” with the goal of beginning business discussions.
“The minority investment is intended to establish a position from which to initiate discussions with Norwegian, including the possibility of a full offer for Norwegian,” the statement reads. “IAG confirms that no such discussions have taken place to date, that it has taken no decision to make an offer at this time and that there is no certainty that any such decision will be made.”
FlyerTalkers are already entertaining a world in which Norwegian Air flies with IAG. Dambus writes: “Wonder if an [Aer Lingus and Norwegian Air] tie-up might be on the cards at some point. Would potentially increase pressure on [Ryanair] and further raise the barrier for additional low-cost competition across the Atlantic.”
Others believe Norwegian could ultimately become part of the current IAG low-cost wing, Level. As opined by FlyerTalker lost_in_translation: “IAG management are no doubt well aware they’re at risk of seeing the same LCC-ification happening in long-haul as has happened in the intra-Europe shorthaul market and they’d like to move to capture that market share leaking to LCC competitors before it’s too late.”