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IAG Looking into buying Norwegian

Posted: Thu Apr 12, 2018 9:53 am
by Someone83
According to both Bloomberg and Norwegian media, IAG is looking into buying Norwegian, and had confirm their interest. What is also know is that they today have bought 4,6% of Norwegian’s shares. So this could be interesting

IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 9:55 am
by LupineChemist
Developing story: https://www.bloomberg.com/news/articles ... wegian-air

Didn't see that one coming.

Re: IAG Looking into buying Norwegian

Posted: Thu Apr 12, 2018 9:56 am
by Someone83

Re: IAG Looking into buying Norwegian

Posted: Thu Apr 12, 2018 10:04 am
by LupineChemist
This is definitely a surprise development.

Helpful for their UK AOC for activity after Brexit.

There might be some serious competition issues, particularly within Spain. It could also be a bit of a shot across the bow at the Finnish government saying that if they won't let IAG buy AY, then they will compete directly against them.

The 787 order book could be a big help for growing EI and IB (if willing to break the all Airbus fleet).

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:09 am
by MaksFly
Why not?

Norwegian is overextended and the writing is on the wall. Only natural they would be shopped.

Re: IAG Looking into buying Norwegian

Posted: Thu Apr 12, 2018 10:09 am
by LupineChemist
Additional thought that the Argentine AOC could be used for a domestic IB brand in Argentina similar to the BA franchise with Comair in S. Africa, just directly owned.

The more I think about this, the more interesting it gets for synergies. It also takes away Norwegian's problem of having to grow the longhaul LCC model at all costs since IAG can definitely use those frames (and accompanying debt) elsewhere and so they can provide longhaul LCC, but just keep the supply right-sized.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:14 am
by LupineChemist
I started posting in the other thread, but I was just surprised, but the more I think about it, the more it makes complete sense.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:16 am
by Mortyman
Apparently the Norwegian managment was not informed in advance:

https://www.nrk.no/norge/ba-eier-vurder ... 1.14003679

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:16 am
by Arion640
Would the competition commission of the EU allow a full merger?

This will not go down too well with LH group/Air france-KLM.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:17 am
by MalevTU134
Will this be kept on a Norwegian Level?....

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:17 am
by qf789
LupineChemist wrote:
I started posting in the other thread, but I was just surprised, but the more I think about it, the more it makes complete sense.


Both threads have been merged now

Re: IAG Looking into buying Norwegian

Posted: Thu Apr 12, 2018 10:20 am
by Kikko19
LupineChemist wrote:
This is definitely a surprise development.

Helpful for their UK AOC for activity after Brexit.

There might be some serious competition issues, particularly within Spain. It could also be a bit of a shot across the bow at the Finnish government saying that if they won't let IAG buy AY, then they will compete directly against them.

The 787 order book could be a big help for growing EI and IB (if willing to break the all Airbus fleet).


especially becaus finnair owned DY for a while...

if it goes through then they have to deal with a merger DY +VY ?

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:26 am
by LupineChemist
Also, with how ubiquitous the 787 is becoming, it's a good aircraft to break the all Airbus fleet at IB since they also make a ton of their MRO operations. Might even be able to get some revenue from UX that way. IB is doing great things with their 332s and the 787 fits right in that model, too. Could open up GDL, MTY, IAD, YYZ as options (also relieving some of the pressure to get more capacity into MEX/JFK/MIA).

Being based in Madrid, I'm IB biased, but EI could also do a lot with them as well as BA out of LGW for the leisure routes and basically just keep whatever routes are profitable as-is to the Nordic countries.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:26 am
by Blerg
If the EU allows this to go through then the next logical step would be to break apart all those transatlantic joint-ventures.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:26 am
by LHRFlyer
A complete surprise.

IAG must be expecting a) a very good price and b) significant group synergies to take out costs.

However, I still struggle to understand why IAG would want to take on Norwegian’s debts. Willie Walsh has been very clear he doesn’t see Norwegian’s growth strategy as sustainable.

I guess this could be a defensive move in part to stop someone else picking up Norwegian.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:29 am
by LTU932
Arion640 wrote:
Would the competition commission of the EU allow a full merger?

This will not go down too well with LH group/Air france-KLM.
And another question: Even if IAG is a registered company in Spain, their main offices are in London. How will the Brexit impact them? And yes, I also have my concerns in terms of antitrust.

Re: IAG Looking into buying Norwegian

Posted: Thu Apr 12, 2018 10:31 am
by MalevTU134
Kikko19 wrote:
LupineChemist wrote:
This is definitely a surprise development.

Helpful for their UK AOC for activity after Brexit.

There might be some serious competition issues, particularly within Spain. It could also be a bit of a shot across the bow at the Finnish government saying that if they won't let IAG buy AY, then they will compete directly against them.

The 787 order book could be a big help for growing EI and IB (if willing to break the all Airbus fleet).


especially becaus finnair owned DY for a while...

if it goes through then they have to deal with a merger DY +VY ?

I believe IAG is creating a mess for themselves. So, they have Vueling, a fairly successful and well-recognized brand for short-haul, and a new, unknown-to-most brand, Level, for long-haul. Now they will have a loss-making brand with AOCs and subsidiaries in who-knows-how-many countries to integrate into all of this, and try to make sense of it and sell it to the general public.
Have they learnt nothing from their previous tries at go!, Deutsche BA and what not?

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:34 am
by travelhound
Norwegian, if sold will go for a premium. It has scale, a strong presence in key growth markets, a very competive cost base and a strong mix of good quality aircraft. It would take years for an airline to create an airline of this size

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:38 am
by LupineChemist
LHRFlyer wrote:
A complete surprise.

IAG must be expecting a) a very good price and b) significant group synergies to take out costs.

However, I still struggle to understand why IAG would want to take on Norwegian’s debts. Willie Walsh has been very clear he doesn’t see Norwegian’s growth strategy as sustainable.

I guess this could be a defensive move in part to stop someone else picking up Norwegian.


Norwegian's debts are unsustainable for Norwegian. They are perfectly sustainable at a company like IAG. They are just bigger. Norwegian's fundamental problem is that they have been trying to grow into profitability, but that growth has been so fast that they are cannibalizing their own yields. IAG is a giant and can easily absorb and use that order book and additional capacity to grow strategically.

Sounds like they put the value at around $3B USD which is right around one year of revenue. Norwegian is apparently very unhappy about that, but I don't know what other options they have as they have a very real possibility of ceasing operations within a year.

Also, combining a low cost shorthaul operation will help to really make IAG a major player in European short haul. VY is strong in S. Europe and DY in the north so there is a lot of complementing there and Norwegian is a well established brand to combine low cost longhaul and shorthaul operations (bye bye Level).

I've always thought Norwegian long haul was a good idea done too aggressively with basketcase management. They just couldn't back down from the aggressive Dreamliner order unless they wanted to also become a lessor.

Also gets rid of some nasty competition at LGW and it's hard to argue that transatlantic from LON suffers a lack of competition for anti-trust worries.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:39 am
by readytotaxi
MOL will not be a happy man. :rotfl:

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:41 am
by fcogafa
If you can't beat them, buy them! Antitrust rules in this case would be complex with various in EU/outside EU countries involved.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:44 am
by azz767
Will be interesting to see what would happen with the short haul frames also. The new A321’s would be good for existing IAG airlines but unless they keep the DY short haul operation as it is, I’m interested to see the 737’s and the max’s as IAG is firmly Airbus now when it comes to short haul

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:44 am
by parapente
I think it has to be a defensive move.
AIG has just finished carefully putting all its battle plans together.Indeed I think it was only yesterday that they announced their 'basic economy' product which brought the headline prices down.The last part of a complicated gig saw covering Spain/level and Gatwick BA.
I feel most observers felt that Norwegian was about to get blown out of the water.I certainly was.You simply don't mess with BA and Translantic routes.
Furthermore so many journalists and contributors here have been pointing out that Norwegian is bleeding cask and was quickly running out.

In any normal circumstances you would just watch them go down the swanny.So why haven't they? One can only guess that another very well financed 'other company' was about to swoop that could have fought IAG toe to toe.Ryanair?

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:45 am
by dtw2hyd
Norwegian should buy IAG, or at least management of merged group should be transferred to Norwegian.

Otherwise, Willy will cut Norwegian service level further, hard to imagine.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:46 am
by fcogafa
ap305 wrote:
This could give the a330 a good chance in the Norwegian fleet....


This could give the B787 a good chance in the Level fleet

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:46 am
by Mortyman
Just after 12 o'clock, Norwegian sent a stock exchange announcement where the company commented on the acquisition pressures and that IAG already owns 4.6 percent of the company.

"Norwegian had no knowledge of this share purchase before it was reported by media in the middle of Thursday," Norwegian writes in the message.

The company also confirms that there has been no dialogue between the two companies.



https://www.dn.no/nyheter/2018/04/12/12 ... -ingenting

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 10:46 am
by ap305
This could give the a330 a good chance in the Norwegian fleet....

Re: IAG Looking into buying Norwegian

Posted: Thu Apr 12, 2018 11:00 am
by Jerry123
MalevTU134 wrote:
Kikko19 wrote:
LupineChemist wrote:
This is definitely a surprise development.

Helpful for their UK AOC for activity after Brexit.

There might be some serious competition issues, particularly within Spain. It could also be a bit of a shot across the bow at the Finnish government saying that if they won't let IAG buy AY, then they will compete directly against them.

The 787 order book could be a big help for growing EI and IB (if willing to break the all Airbus fleet).


especially becaus finnair owned DY for a while...

if it goes through then they have to deal with a merger DY +VY ?

I believe IAG is creating a mess for themselves. So, they have Vueling, a fairly successful and well-recognized brand for short-haul, and a new, unknown-to-most brand, Level, for long-haul. Now they will have a loss-making brand with AOCs and subsidiaries in who-knows-how-many countries to integrate into all of this, and try to make sense of it and sell it to the general public.
Have they learnt nothing from their previous tries at go!, Deutsche BA and what not?

LEVEL can be folded and Norwegian can be the long haul LCC and work alongside the likes of BA and IB rather than against. Vueling can be their LCC for the Med while Norwegian is the LCC for Northern Europe. Yes there will be overlap but they can complement each other. Any excess A330s from LEVEL can be used by Aer Lingus and IB for expansion.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 11:08 am
by Revelation
LHRFlyer wrote:
A complete surprise.

IAG must be expecting a) a very good price and b) significant group synergies to take out costs.

However, I still struggle to understand why IAG would want to take on Norwegian’s debts. Willie Walsh has been very clear he doesn’t see Norwegian’s growth strategy as sustainable.

I guess this could be a defensive move in part to stop someone else picking up Norwegian.

My vote:

c) Maintain (regain?) a large measure of control on near-monopoly pricing on the TATL routes.

IAG is threatened, and here's their response.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 11:15 am
by Kikko19
the IAG Unions will happily fight any re-organization... about vueling-dy the operate different fleets... I see messy times at least in Spain where both operate, but i guess the management of IAG have some plans about it.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 11:18 am
by LupineChemist
Revelation wrote:
My vote:

c) Maintain (regain?) a large measure of control on near-monopoly pricing on the TATL routes.

IAG is threatened, and here's their response.


Are you really saying there is a lack of competition on TATL flying? I mean, particularly out of London that just seems insane to me, even with the JVs. So you have AA/BA/IB/AY with EI trying not to get in the way. LH/SN/LX/OS and AF/KL/AZ/DL/VS (this is all merged now, right?) being the main players. That combined with all the smaller operators is tons of competition. I know I've been paying dirt cheap fares from MAD to the US for years now and Norwegian hasn't even entered the market yet.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 11:18 am
by sevenair
If Norwegian were on the brink, like so many of you on here excitedly claim, then BA would be doing this would they? They also wouldn't have introduced LEVEL nor offered basic economy on Norwegian routes. Surely you'd just let them implode?

This is bad news for the consumer and my thinking would be that BA is doing 'a Laker'. They've seen that lowering prices hasn't put Norwegian out of business, but a takeover and a shut down/integration could be a possibility in the future. It's how many tech firms have thrived and eliminating competition is never good for the consumer.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 11:23 am
by Mortyman
It would surprise me if the ceo who is the majority owner and controls the company is interested in selling. Certainly not for the sum that is presented today.

Re: IAG Looking into buying Norwegian

Posted: Thu Apr 12, 2018 11:27 am
by Jayafe
MalevTU134 wrote:
...and a new, unknown-to-most brand, Level, for long-haul. Now they will have a loss-making brand with AOCs and subsidiaries in who-knows-how-many countries to integrate into all of this, and try to make sense of it and sell it to the general public.


Not that messy. Level has no AOC, already flying as IB birds. Move those A330s to MAD and repaint them, focusing 787s in BCN as 2nd national HUB but for LCC, same in London with DY’s Dreamliners in Gatwick, keeping BA for LHR mainly.
Set them both to connect with MAD and BCN to connect with the expanding South America AOC and brand recognition, feed the LH flights from the east with VY.

Vueling and Norwegian feeding, Iberia and Norwegian flying LH fro the 2 main cities in Spain, and Norwegian Argentina as last hop for local transit passengers. Same applies to North America from London, using OW connectivity with AA for local transits.

Kind of a powerful combo on paper, I must say...

PS: 787s in IB’s fleet? That would be indeed over complicating things, don’t see it happening at all, IB just managed to find a way to be profitable and slowly grow, adding stuff to the mix will likely ruin the whole thing.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 11:29 am
by CXfirst
Shares in Norwegian have gone up an incredible 45% today!

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 11:45 am
by LupineChemist
mcdu wrote:

Would be a great move by BA. Kill the competition for pennies on the pound. NOrwegian would not be peddling themselves if they had a future going g forward.


My thoughts on this are positive, but there is no indication Norwegian is peddling. This appears to be not fully hostile since it's all going to depend on what Kjos does with his shares, but definitely not all that friendly and wasn't discussed prior.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 11:45 am
by skipness1E
dtw2hyd wrote:
Norwegian should buy IAG, or at least management of merged group should be transferred to Norwegian.

Otherwise, Willy will cut Norwegian service level further, hard to imagine.

OK, you win the internet for today.
Just out of mild curiosity, how would they pay for that on top of all the other debt they are carrying?

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 11:46 am
by SonOfABeech
Insta-growth for Level+trying to kill a competitor, maybe?

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 11:50 am
by par13del
LupineChemist wrote:
Are you really saying there is a lack of competition on TATL flying?

If I follow his line of thinking the point is that there is too much competition resulting in lower prices and yields at the mainline carriers, who in some quarters are said to be forced to join the race to the bottom in lowering service standards and fares.
Eliminating one competitor would bring back some balance to the force..............especially if it is an upstart LCC, look how long it took between Laker and now....so in addition to elimination it also serves as a warning for others, wait another 20 years or so before trying again.....

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 11:53 am
by LupineChemist
CXfirst wrote:
Shares in Norwegian have gone up an incredible 45% today!


And there you have the leverage for Mr. Kjos. He can walk away fully in tact and make quite a lot of money today or have a very real shot at having nothing within a year with his shares. Honestly, the narrative about him can be "The man that made low cost long haul" while being a billionaire or "The man who destroyed a profitable airline with a folly" while walking away with nothing extra.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 11:55 am
by Revelation
LupineChemist wrote:
Revelation wrote:
My vote:

c) Maintain (regain?) a large measure of control on near-monopoly pricing on the TATL routes.

IAG is threatened, and here's their response.


Are you really saying there is a lack of competition on TATL flying? I mean, particularly out of London that just seems insane to me, even with the JVs. So you have AA/BA/IB/AY with EI trying not to get in the way. LH/SN/LX/OS and AF/KL/AZ/DL/VS (this is all merged now, right?) being the main players. That combined with all the smaller operators is tons of competition. I know I've been paying dirt cheap fares from MAD to the US for years now and Norwegian hasn't even entered the market yet.

No, I'm saying there is near-monopoly pricing due to collusion amongst the legacy air carriers, and Norwegian is an element of change that IAG would pay to eliminate.

Basically we have an air cartel, and the other cartel members will be happy if IAG takes Norwegian down.

No accident that it took the FAA so long to approve Norwegian flights to the US.

Same cartel that has given us "capacity discipline" across the US industry.

mcdu wrote:
Pe@rson wrote:
I can't WAIT to see the responses of mucu and Varsity1. LOL.


Would be a great move by BA. Kill the competition for pennies on the pound. NOrwegian would not be peddling themselves if they had a future going g forward.

My prediction would be BA buys the parts, dismantles the operation and puts the planes into use elsewhere. That is IF this happens. Who says BA isn’t trying to shop and see how bad things are at NOrwegian. They will get to eye the books in any acquisition.

How do we jump from IAG's statement that we've bought near 5% of Norwegian without telling them to Norwegian is peddling themselves?

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 11:55 am
by JannEejit
What was the last massively debt ridden airline in competition that IAG purchased... BMI ? Look what happened to them, debranded, fleet absorbed into BA, part of the business (BMI-R) sold on. This is interesting news, but I can't help but see a similar fate for Norwegian. The Russians have a saying that might be appropriate here... "You remove the man, you remove the problem"

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 11:56 am
by Mortyman
dtw2hyd wrote:
skipness1E wrote:
...
Just out of mild curiosity, how would they pay for that on top of all the other debt they are carrying?


Brent sweet crude.


If you are saying that the Norwegian government will get involved you are wrong.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 11:56 am
by dtw2hyd
skipness1E wrote:
...
Just out of mild curiosity, how would they pay for that on top of all the other debt they are carrying?


Brent sweet crude.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 11:56 am
by skipness1E
Level is currently Iberia painted Green, nothing more.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 11:58 am
by skipness1E
Mortyman wrote:
It would surprise me if the ceo who is the majority owner and controls the company is interested in selling. Certainly not for the sum that is presented today.


Given the way the CFO fled the company, this is perhaps his best way of saving the whole pyramid scheme from crashing with him at the helm, and even better, he gets paid to walk away.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 11:58 am
by airbazar
Arion640 wrote:
Would the competition commission of the EU allow a full merger?

This will not go down too well with LH group/Air france-KLM.


What merger? IAG is NOT an airline. When are people going to understand that? I see zero competition issues here.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 12:05 pm
by downdata
If in doubt, buy out your competition :)

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 12:10 pm
by Mortyman
skipness1E wrote:
Mortyman wrote:
It would surprise me if the ceo who is the majority owner and controls the company is interested in selling. Certainly not for the sum that is presented today.


Given the way the CFO fled the company, this is perhaps his best way of saving the whole pyramid scheme from crashing with him at the helm, and even better, he gets paid to walk away.


He left after 15 years in the company. You are putting a bit much into it I think.

Re: IAG considering placing a bid for Norwegian

Posted: Thu Apr 12, 2018 12:10 pm
by laurenceh
LupineChemist wrote:
And there you have the leverage for Mr. Kjos. He can walk away fully in tact and make quite a lot of money today or have a very real shot at having nothing within a year with his shares.


Yes but regardless of what happens Kjos is always going to alright for himself. Even if the shares tank I am sure he plenty of money nestled away.