I am sure this has been discussed in the past probably, but how do you think Norwegian could fit within the portfolio of airlines of IAG?

-SHORT HAUL OPS (737)

The 737 is highly differentiated from anything in IAG. None of the airlines part of the group operates this model for short- haul flights, being all of them in short haul mainly focused (if not all) in Airbus. The A319/A320/321 has heavy presence at all fleets (Aer Lingus 0+ 34 + 4, Iberia 15 + 17 + 11, British Airways 44 + 67 + 18). Taking into account this, and also the fact that IAG likes airlines to individually operate each own market, we could easily see an independent Norwegian, operating short-haul flights in Europe under its own brand. Here, several corridors would be logical to be kept under them:

-Domestic Scandinavia (Norwegian Air Shuttle)
-International Scandinavian (Norwegian Air Shuttle)
-Intra-European only where no duplicities arise between Vueling/BA/Iberia/AerLingus affecting competitivity. In other words, I can see Norwegian and BA sharing part of the market between London and Stockholm, but I don't see them competing on the Barcelona-Gatwick route. (Norwegian Air International + Norwegian Air UK)

That should be enough to maintain a decent amount of the planes which they already operate based in Scandinavia.

Out of Scandinavia, Norwegian Air International operates several bases mainly in the UK, Italy, and most importantly in Spain. Figures of planes are around:

LGW: 5 (737)
FCO: 3 (737)

Spain: 25 total
BCN 4 (737)
ALC 4 (737)
PMI 3 (737)
AGP 7 (737)
TFN 1 (737)
TFS 3 (737)
LPA 3 (737)

Important fact: all D8 European bases except LGW are already Vueling bases with local crews and aircrafts allocated there.

Norwegian could keep a notable leisure-sort-of-charter-contractor profile keeping vacational flights mainly Scandinavia/UK-to the Canaries-Greece, etc.

Spain would be probably the country where the more duplicities between D8 and VY are expected. Those linking Spain to Scandinavia could be better served by a Norwegian stronger brand in the local Northern countries. Thus, the Spanish bases could keep services to these places. Norwegian could also better serve markets where Vueling has proved its weakness to compete (i.e. AGP/ALC/TFS/LPA to the UK/Scandinavia).

IAG could always sale part of the large amount of 737s. The majority of them are rather new, so there would be tones of interested third parts.

-LONG HAUL OPS (787)

Long haul fleet with the 787 would better fit the IAG needs, and we can pretty much agree BA would be happy to see them go painted in white/red/blue colors.

The Norwegian Long Haul structure is even more complex with dispersed bases:

USA (JFK, FLL, and LAX)
BKK
Europe (LGW, BCN, CDG and FCO).

Again, the logical non-duplicate routings are the ones linking Scandinavia with USA and Thailand. These could easily be maintained through crews and planes flown across the corridors BKK-Scandinavia-USA, and that'll be sort of getting back to the square one for Norwegian. (Norwegian Air Shuttle)

I think that the only place out of USA/BKK where Norwegian should keep a long-haul base is LON, probably LGW. IAG should decide whether is best to grow the long-haul market in LGW via Norwegian or via BA. They could either transfer the 787`s deployed in LGW to BA, or use them under the current UK's AOC (DI Norwegian Air UK) to be able to truly explore the long-haul-low-cost segment. I don't know how different could this get from any BA movement in LGW (it should be different to justify the move).

BCN is sort of a large European long-haul base for DY. For some reason I see LEVEL better positioned there in terms of destinations. Keeping Norwegian there won't help much to serve very much needed markets for Spain (like South America), which LEVEL (through Iberia) can better serve. LEVEL was created to compete Norwegian in BCN, however, it rather looks now like the perfect move for Iberia to finally serve a natural market for them in Spain (BCN) that due to different reasons, under Iberia, it never worked.

FCO and CDG could be served from USA bases, so I am not sure if IAG could keep bases there.

The whole venture with Norwegian Air Argentina is hard to understand if Norwegian ever is acquired by IAG.

I am not sure if the narrow-body transatlantic market is just too much for IAG at the time. Aer Lingus could potentially have a nice role there too.

Main problem here? All this goes hard against competence in so many markets.

Very long and in depth post with some interesting remarks but in comparison I'll just make my reply short.

I honestly and personally don't actually see IAG purchasing Norwegian especially in the short term!

If anyone I think that IAG will probably wait until Norwegian goes down the pan and they'll pick up what's ever left.

Cunard wrote:

Very long and in depth post with some interesting remarks but in comparison I'll just make my reply short.

I honestly and personally don't actually see IAG purchasing Norwegian especially in the short term!

If anyone I think that IAG will probably wait until Norwegian goes down the pan and they'll pick up what's ever left.

I'd agree with that. IAG don't necessarily need Norwegian's route network. They just need to take out a competitor. The vultures will circle the carcass when Norwegian finally does tip over (and it very likely will) and I see pieces of it going to different airline groups including the surviving LCC's. EasyJet, some of IAG's low cost portfolio, and Lufthansa will snap up the major assets, with SAS potentially taking the Scandinavian remnants.

a350lover wrote:

The whole venture with Norwegian Air Argentina is hard to understand if Norwegian ever is acquired by IAG.

Au contraire. Iberia and LEVEL have in Argentina their largest long haul market outside the US. The domestic & regional Norwegian operation there could be turned into Iberia Express (if the Norwegian brand was to be retired) and you have a great feeder and brand extension in a most strategic market for IAG. This is ultimately what Norwegian's plan is, 2-3 years down the road, absent a potential merger.

a350lover wrote:

BCN is sort of a large European long-haul base for DY. For some reason I see LEVEL better positioned there in terms of destinations. Keeping Norwegian there won't help much to serve very much needed markets for Spain (like South America), which LEVEL (through Iberia) can better serve. LEVEL was created to compete Norwegian in BCN, however, it rather looks now like the perfect move for Iberia to finally serve a natural market for them in Spain (BCN) that due to different reasons, under Iberia, it never worked.

To be honest is IAG acquired DY I do not see Level in its current form surviving. Either they keep using the DY name or rebrand it as Level, but I suspect they would focus LCC long haul wide body service on their newly acquired 787 fleet and Level’s current A330 will be shifted towards IB branded flying (is IB still flying Level’s flights now?) or given to EI. That said I can totally see IAG eventually rebranding Vueling as Level as well, so who knows.

If IAG were to acquire the DY group, the overall IAG network allocatuon would probably look something like this.

-BA (including CJ): LHR, LGW, and LCY
-IB (including I2): MAD
-EI (including RE): Ireland
-VY: Spain (short-haul; except MAD), Italy (short-haul), and France (short-haul)
-Level (long-haul ops): Spain, Italy, and France
-Level (short-haul & long-haul ops): Austria, Germany (possible future expansion), Switzerland (possible future expansion), and UK (except LHR, LGW, and LCY; possible future expansion)
-DY: Scandinavia
-BE (IAG reportedly interested in acquiring): UK (except LHR, LGW, and LCY; short-haul)

The DY group wide body fleet that is not utilized in Scandinavia will likely be divvied up among the other IAG members until more wide body aircraft already on order are delivered. DN could be sold to the LATAM Airlines Group and merged into 4M.

meanwhile yesterday DY lost 8% of value. the load factor and yield fell. they should find a partner very soon and change strategy.

I don't see it happening.
Norwegian are burning through cash by the bonfire-load.

IAG would not get clearance from competition regulators to purchase them as they are too dominant TATL.
They would be better suited by maintaining pressure on Norwegian's yields and hoping that they collapse before an angel investor comes to their rescue - Etihad are no longer interested in taking stakes in airlines circling the drain.

TWA772LR wrote:

To eliminate the brand and competition and spread the aircraft among the IAG airlines.

The thing is that the 737 doesn't go well (apparently) with the current fleet at IAG's airlines. The (12) 787s could easily go under BA though.

Polot wrote:

To be honest is IAG acquired DY I do not see Level in its current form surviving. Either they keep using the DY name or rebrand it as Level, but I suspect they would focus LCC long haul wide body service on their newly acquired 787 fleet and Level’s current A330 will be shifted towards IB branded flying (is IB still flying Level’s flights now?) or given to EI. That said I can totally see IAG eventually rebranding Vueling as Level as well, so who knows.

Iberia has grown independently quite a lot. I am not sure if those A330s could all go back to IB. LEVEL flights in Barcelona are still operated by Iberia crews/planes. Compared to the Orly operation, Barcelona is way more successful and stable, mainly because IB is always in back-up for any eventuality when it happens. The ORY operation isn't going as expected and the new plane there has been delayed.

LEVEL should create some brand equity before it can "cannibalize" more of the IAG's business in Europe. Despite Vueling reputation, for Barcelona, the airline is extremely well-known. It'll take some time before they can switch it all to LEVEL. And as far as I know, the LEVEL venture in VIE is seeing modest numbers for most of the routes.

would DY be able to overfly russia/ siberia if absorbed by IAG? would they put more planes to HEL? AY will be very glad

IAG have declared to the markets that their 772s (10Y) have lower costs than Norwegian. So if IAG feel that long-haul, p2p, low-cost flying is important in the U.K., outside London BA seems like a sensible brand to use. They could shift the 787s from Gatwick to Heathrow to free more 777s in the other direction, but I don’t think that’s mandatory.

The Argentina and Caribbean islands are interesting. I feel that LEVEL or Vueling would be better brands here, Norwegian seems slightly farsical. Maybe that’s why it works?

I don’t think the 737 fleet is something to get overly worried about, IAG is large enough to operate both the 738 & 320. They have large orders for the NEO, the MAX could work well in the Norwegian operation.

In many ways then the key word is 'monopoly' would the competition commission allow a T/O?
Obviously ( if it's being considered As rumoured) then IAG must have considered this problem.
But -as above-if It were to happen then one imagines Norwegian would become de facto the Scandinavian based arm of IAG.
737's not an issue.

a350lover wrote:

TWA772LR wrote:

To eliminate the brand and competition and spread the aircraft among the IAG airlines.

The thing is that the 737 doesn't go well (apparently) with the current fleet at IAG's airlines. The (12) 787s could easily go under BA though.

Norwegian has 31 + Boeing 787's

parapente wrote:

In many ways then the key word is 'monopoly' would the competition commission allow a T/O?
Obviously ( if it's being considered As rumoured) then IAG must have considered this problem.
But -as above-if It were to happen then one imagines Norwegian would become de facto the Scandinavian based arm of IAG.
737's not an issue.

that would just push SAS in the LH group. what about AY? will they be happy about the expansion of IAG at their expenses?

TWA85 wrote:

DN could be sold to the LATAM Airlines Group and merged into 4M.

That would be ironic as a good number of DN's staff came from 4M. Norwegian Argentina has thus far only hired those with previous airline experience.

Most of the Norwegian employees work for third companies who are owned by Norwegian, but outsourced. It's hard to make a clear picture of what'll be the future of them if ever the airline is acquired by IAG. Obviously they'd be needed for the operation of the fleet, but I don't think they can end up under any of the airlines of the group without a new start over in their contracts.

Norwegian employees that are outsourced and working for third party companies whether those companies are actually owned by Norwegian or not would be the least of IAG's worries if they ever took control of Norwegian which btw as I've previously commented on as have others I don't see as being very likely.

Looking at it from a different angle then if IAG did takeover Norwegian I think that those employees that are outsourced and working for third party companies would either be kept on (if needed), made to reapply for their positions, made redundant or just let go with no compensation whatsoever, many scenarios when your job is outsourced and your working for a third party company, the liabilities involved probably wouldn't be IAG's problem that's how outsourcing and third party companies work.

IAG woudn't work as Norwegian's plan to fly into YHM is to attract not those in Toronto but those in Buffalo too.

Would LEVEL take over IB's operations in the Caribbean? I doubt HAV, SDQ and SJU are markets for IBs Business Class; those times $$$ are gone. The Caribbean is very LCC nowadays. IB likely returned to SJU as a result of Puerto Rico's government incentives; I'm curious how their SJU loads are. BA left SJU a while back and even DY pulled out of SJU.

I believe Norwegian staff are employed on perm contracts via osl which is owned by Norwegian . If they stop flying for the airline the employment company will still pay and redeploy to another . It’s a strange model somewhere between the usual method and the freelance aka Ryanair model . It’s supposed to give staff security while partner airlines flexibility

Ps I agree that the main reason for acquiring Norwegian is to take out a competitor and drive up fares . What’s left may be used to expand airline presence and frustrate competitors where iag are left lacking

PRAirbus wrote:

Would LEVEL take over IB's operations in the Caribbean? I doubt HAV, SDQ and SJU are markets for IBs Business Class; those times $$$ are gone. The Caribbean is very LCC nowadays. IB likely returned to SJU as a result of Puerto Rico's government incentives; I'm curious how their SJU loads are. BA left SJU a while back and even DY pulled out of SJU.

This is a very interesting point, but has little to do with Norwegian (despite DY served this market from LGW/Scandinavia in the past).

Not long time ago, someone was saying that LEVEL dropped PUJ because it wasn't performing as expected. I remember reading something like "young people do not see the Caribbean as South East Asia" and I thought it was a real opportunity to replicate the model of tourism which has helped a lot diverse communities in Asia (with more luck in one places than others, true), to be replicated in the Caribbean. The differences are huge, but the natural wonders and the richness of countries like Puerto Rico, Cuba or Republica Dominicana is gorgeous, so local authorities should work on a project like "South East Asia in the Carribean".

f4f3a wrote:

Ps I agree that the main reason for acquiring Norwegian is to take out a competitor and drive up fares .

Isn't that the reason behind any and every merger/acquisition in any industry?

For what it's worth, I can see IAG keeping the Norwegian brand to expand its presence in Scandanavia. That'd be a good use of the 737s. The 787s will probably be a mix of moved to LHR for BA (I think Norwegian's are RR powered too) but some will be kept for Scandanavia transatlantic/longhaul where it works. Keeping Norwegian allows IAG to drive down costs by playing each opco off against rach other for any new work/expansion. The ultimate race to the bottom in a way.

The overlap in Spain would probably be eliminated.

Not sure if Norwegian Argentina would be desired by IAG at all.

master14225 wrote:

IAG woudn't work as Norwegian's plan to fly into YHM is to attract not those in Toronto but those in Buffalo too.

The NFTA wouldnt do that .... Norwegian would fly out of BNIA and not IAG.

TWA772LR wrote:

To eliminate the brand and competition and spread the aircraft among the IAG airlines.

I don't think IAG would eliminate the brand. Airlines with strong brand recognition outside IAG's home markets are very attractive to IAG. They would keep the name, albeit routes that overlap with other IAG airlines would probably be suspended.

One thing that I think could be useful is getting a decent 787 fleet at IB.

IB has been pretty limited in growth recently due to fleet limitations rather than possible options so more aircraft there will certainly help and there are a lot of opportunities for long and thin on 788.

Also, one of IB's big moneymakers is their MRO and with how prominent the 787 has become, it would make a lot of sense to have maintenance staff that can service other airlines' Dreamliners as well. And I know aircraft acquisition is done at the IAG level, but it would still help keep Airbus honest when negotiating prices by showing that they will absolutely buy Boeing for IB as well.

It would fit in that spot where they would buy a competitor to liquidate it.

I do not see how the European Competition Authorities would ever allow IAG to acquire Norwegian. The very acquisition would reduce competition in UK- America and Spain- America markets at a time when the BA transatlantic joint venture is already under investigation to see whether it has fulfilled its promise of INCREASING competition. It would not matter how Norwegian might be branded or structured after any IAG acquisition, it would srill be under IAG's control and thus inevitably not competing. You cannot compete with ypurself.

Well, if Norwegian goes under then there wouldn't be any competition to worry about.

a350lover wrote:

PRAirbus wrote:

Would LEVEL take over IB's operations in the Caribbean? I doubt HAV, SDQ and SJU are markets for IBs Business Class; those times $$$ are gone.

Not long time ago, someone was saying that LEVEL dropped PUJ because it wasn't performing as expected. I remember reading something like "young people do not see the Caribbean as South East Asia" and I thought it was a real opportunity to replicate the model of tourism which has helped a lot diverse communities in Asia (with more luck in one places than others, true), to be replicated in the Caribbean. The differences are huge, but the natural wonders and the richness of countries like Puerto Rico, Cuba or Republica Dominicana is gorgeous, so local authorities should work on a project like "South East Asia in the Carribean".

I don't see how you could replicate the SE Asia tourism model in the Caribbean. The costs of items in Thailand, Cambodia, Laos, and several of the rest of the AESEAN countries offer beer for $1, 1 hour massage between $10 and $30 U.S.D. Cheap travel in between with Air Asia, etc. I don't see enough places in the Caribbean to replicate that now.