IAG buys stake in Norwegian as first move in takeover talks

IAG buys stake in Norwegian as first move in takeover talks

International Airline Groups (IAG), the owner of Aer Lingus and British Airways, has acquired a 4.6pc ownership position in low-priced carrier Norwegian.

IAG said on Thursday that it has acquired a 4.61 percent stake in Norwegian and that it planned to start talks with the airline which included the possibility of a full offer for the company being made.

IAG says no official discussions have taken place, and the company emphasized that it hasn't decided whether it will make an offer.

"Norwegian had no prior knowledge of this acquisition before it was reported by the media mid-morning Thursday", the carrier said in its own statement.

And of course, Norwegian seized the opportunity to reassure its shareholders saying that "the interest of one of the largest worldwide aviation groups demonstrates the sustainability and potential of our business model and global growth".

The firm has had a major impact on the long-haul market in Europe, undercutting rivals on trans-Atlantic ticket prices.

IAG's Aer Lingus reported a 2.8 percent increase in revenue tonne-kilometers for the first three months of 2018 compared to the same period previous year as British Airways reported a 2.0 percent drop and Iberia traffic rose 4.7 percent in the period.

More news: Hurricane season 2018: Which names will be used this year?

In its wake, Icelandic budget carrier Wow has also entered the USA market and grown rapidly, while the Primera Air will launch service this month.

Norwegian's shares shot 47 percent higher at one point before descending to 38 percent gain on the Oslo stock exchange.

IAG said it had noted recent press speculation that it is considering making an offer for Norwegian.

This year, Norwegian wants to boost its offer by 40 percent.

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.

Shares in IAG initially dropped 3.4 percent on the news before recovering to trade up 1.2 percent at 623 pence.

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

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