IAG Won’t Rule Out Another Bid For Norwegian But It’s Unlikely

Reading this headline you might think your back in the winter of 2018… but no, it seems that IAG has not yet totally given up on swallowing Norwegian whole…

IAG has not ruled out whether or not they will make another bid for the disruptive low-cost long-haul carrier, but has said it is unlikely.

Norwegian Flat Beds
Norwegian revolutionized long haul travel with their low fares. Photo: Norwegian

What are the details?

As reported by Flight Global, CEO of IAG, Willie Walsh, was recently speaking at the A4E Aviation Summit in Brussels when the topic of Norwegian came up.

The group had been a 5% stakeholder in the airline back in 2018 and had made two offers of acquisition, both of which were rejected for shareholders. IAG has since sold its stake, claiming in its 2018 shareholders report that the airline was not cheap enough yet to buy. They have decided to focus on its own version of Norwegian, LEVEL, for the time being.

“I think it was the right thing for us to do to look at it as an option. I would have liked it if we had succeeded in bringing Norwegian into the group but it didn’t work out.” Walsh reminisced,  “It’s a pity – I still hope they succeed”

But Walsh was not so quick to totally dismiss a future offer, suggesting that if they had some stake in Norwegian down the line they would be open to offering another takeover bid. “I’d never say never, but I think it’s unlikely.”

Norwegian has been under some financial strain in the last few months, as the winter months prove to be very lean for the airline.

Norwegian rights issue
Norwegian was looking to raise $350million earlier this year. Photo: Norwegian

However, Walsh was quick to point out that the low-cost long-haul model pioneered by Norwegian was still very much a great idea.

“There is a profitable niche there, and we are going to serve it,” he says. “We are committed to expanding Level. It is performing very well in the markets it is operating in.”

LEVEL is attempting to replicate the success of Norwegian. They currently have 9 aircraft (4 short-haul A321-200s and 5 A330-200s for long-haul) and are considering buying another 15 aircraft by 2022 (possibly A330neos or Boeing 787s). Some critics have pointed out that these aircraft are just repainted Iberia planes and that they are nowhere near as efficient as Norwegians 787s.

LEVEL
A LEVEL A330 lands at Barcelona. Source: Wikimedia

At the end of the discussion, Walsh did seem to be a little jealous of what Norwegian CEO, Bjorn Kjos, had been able to pull off (and how Norwegian was really biting at the heels of British Airways on some routes).

“He’s proven, if not to everybody but certainly to us, that the market exists and the customer will embrace the business model.”

What do you think? Will IAG and British Airways offer to buy out Norwegian again one day? Let us know in the comments.

Leave a Reply

Your email address will not be published. Required fields are marked *

Recommended: