British Airways has taken a 4.61% stake in Norwegian

In the battle for the skies over the Atlantic, International Airlines Group is eyeing another co-pilot. The owner of British Airways has taken a 4.61 per cent stake in Norwegian Air Shuttle, the low-cost airline whose launch of ultra-cheap US flights from Europe has led to a scramble among established players to mimic offerings or risk losing passengers. It said it would “initiate discussions with Norwegian, including the possibility of a full offer for Norwegian”. IAG, which also owns Vueling, Aer Lingus and Iberia, brings with it financial muscle to help patch Norwegian’s wounds, which include deep losses and a NKr22.3 billion ($2.9 billion) debt mountain But its investment, or even a full takeover, does not solve the Scandinavian carrier’s most fundamental problem — how to make money flying passengers across the Atlantic for under £70… The move also comes at a time of consolidation among European airlines, driven by a brace of corporate failures as years of discounting drives the need for scale to thrive. EasyJet, which recently bought collapsed airline Air Berlin’s operations at Tegel Airport, is vying with Lufthansa to buy out Alitalia, which the Italian government is seeking to keep running… BA, which missed out on the low-cost short-haul bonanza in Europe by selling its cut-price Go brand to EasyJet, is keen to avoid a similar mis-step when it comes to the lucrative long-distance market.
 
Peter Campbell

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