IAG and NorwegianBack to Forum
If you were really concerned about Americanisms creeping into British English then you would not say…..
…..The Times. (period) …..but
…..The Times. (full stop)
Whicn part of the line below is hard for you to understand?
(period, as you seem to be going American).
Let me know and I’ll do my best to explain.13 Apr 2018
The premise of my original comments was based on the fact that historically BA’s management, and now by proxy IAG tend to fear competition rather than embrace it .
They don’t see competition as an opportunity to improve their own offering by adopting innovative new approaches to their own business model.
Simple thinking means their response to threats tend to be reactively adopting the same approach or worse, (as I fear in this case ) buying themselves out of the perceived problem/ threat .
I’d imagine that Norwegian’s long haul flights are perceived as high risk to BA’s LHR hub model. Especially their lucrative Trans-Atlantic routes.
As I’ve mentioned before , BA has got to be hurting, as the ME3 leech away what was their natural domestic market that used to transit BA when heading eastward and southbound .
Could it be that this pesky Scandinavian is the proverbial straw that breaks the BA Hubs back ?
In conclusion I doubt that IAG are going to allow customers a LCC choice originating in their own backyard (even if they own it) that rivals BA’s dominance westward .
Oh, and I totally agree with BugAdvisor. Norwegian is a great airline , and I suspect is far superior in almost every regard than Vueling ??13 Apr 2018
A good fit for IAG and a way to compete longhaul from other airports than LHR without expanding Level.
We all know it will reduce competition however if IAG controls less aircraft than LH the EC can hardly refuse the takeover.
IAG may have to give up a few slots as a token gesture?
It may have been a blessing in disguise that FR got Niki!13 Apr 2018
Perhaps only over its routes in the EU, that’s maybe 90% of Norwegian’s operation – until Brexit.
True. But I guess the competition authority will have a good look at it – for what they are worth – if it happens. Seems in the airline business IAG/BA always get their way.
And maybe someone else will come along and bid for them? Who knows?13 Apr 2018
This of course always presupposes that Norwegian is actually for sale!
So far I have not heard or read any definitive comment on that from Norwegian Management or the Norwegian Government who I am sure would have a say in this at some stage.
If you recall there used to be two mainstream Airlines in Norway, SAS and Brathens. When Brathens started running into trouble the Norwegian Government pressurised SAS into buying them [this was the heady days before the recession]. This is when the fledgling NAS [Norwegian Air Shuttle] started to expand to what it is today.
It is clear that the Norwegian Government is, or at lest was then, protective of its airline industry so it could get very interesting to see how they react if this does progress to a full takeover.
The other factor is that IAG apparently purchased the 4+% without the prior knowledge of Norwegian, so presumably this indicates that any future discussions are going to start from a hostile bid perspective.
Also consider that Qatar have built a very good long haul business from Scandinavia including OSL via Doha, so as a major BA shareholder I guess their position also has to be considered if BA bought Norwegian.14 Apr 2018
Agree with most of what has been said. This is a very opportunistic move by IAG to takeover one of its most potent competitors, but whose balance sheet weakness means it can get it at a very good price.
The EU competition authorities will take a look at all the routes where Norwegian and IAG compete where at least one end of the route is in the EU. It is likely that the combined group would have to cede several slots at Gatwick – and maybe even Heathrow – to support competition on London-US and London-Nordic routes. There are also competition issues in Barcelona and to some extent on Ireland-US routes. If IAG is required to sacrifice a significant number of slots at Gatwick and/or Heathrow, it could decide to walk away. Indeed, if rivals can successfully argue that combined the group would have too much dominance of the London longhaul market, then the deal could be blocked entirely.
But one is right to be sceptical about the regulators’ role – when it comes to the airline industry, regulators have a track record of being one step behind. The definition of the relevant markets will be key.
As for the Norwegian Government, it is not so much protective of Norwegian airlines as Norwegian routes. Norway is heavily dependent on its domestic air services and the collapse of Braathens SAFE would have disrupted several domestic markets. Norwegian is a much bigger beast – one that long ago outgrew the Norwegian market. If there was an imminent risk of its collapse, the Government might take steps to secure those routes (mainly to ensure competition for SAS), but trying to intervene on Norwegian as a whole would be a stretch, I think.16 Apr 2018
Quite a clever punt, really. IAG has, I calculate, spent less than €40 million for the stake. If the various regulators, and Norwegian shareholders, agree then IAG relatively get new aircraft and reduce competition. If Norwegian shareholders, or regulators, say no, then IAG walk away with a few million Euro loss when they dump their shares. This would potentially destabilise Norwegian, and certainly distract their management from trying to avoid failure. A win-win for IAG.17 Apr 2018
Interesting piece in The Sunday Times
The founder of Norwegian Air is flying into turbulence
“IAG’s timing was curious. The airlines giant, led by pugnacious boss Willie Walsh, has long coveted Norwegian. Its transatlantic exploits are starting to threaten BA’s dominance on its most lucrative route, London-New York. Why buy a struggling airline now, rather than intensify competition and wait for it to fail? Other airlines have joined the queue, Kjos said last week, adding that everything is for sale “if the price is right”.
HSBC aviation analyst Andrew Lobbenberg reckons a restructuring could have been on the cards before IAG’s interest emerged — a deal that would have split Norwegian into separate operating and plane-owning companies. Walsh may have chosen to move before such a deal could be pulled off. “That has always been the one obvious get-out-of-jail card for what is otherwise a very challenged balance sheet and cashflow environment for Norwegian,” said Lobbenberg”.29 Apr 2018