Strategic Aviation
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- Jan 1, 2017
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Norwegian Plays Coy, Rejects Two IAG Bids Despite Clear Interest In Buyout - One Mile at a Time
Initially Norwegian management said that they had no interest in being acquired, though I think it goes without saying that every airline has a price. Today it has been announced that Norwegian has turned down two separate 100% takeover bids from IAG.
I think the conclusion here is inevitable — IAG has loads of cash, and Norwegian isn’t doing great financially. At this point it’s no longer a question of whether IAG will take over Norwegian, but rather it’s a matter of the price they’ll pay. I’d be shocked if this deal wasn’t finalized in the next few weeks (unless Norwegian plays hardball and strings them a long a bit longer, since they know they have leverage).
Once the deal is complete, the question will be what exactly IAG wants to do with Norwegian. They can:
- Continue operating Norwegian independently as a brand, given that it’s generally well liked, while making it complement British Airways, rather than compete with it
- Integrate Norwegian into LEVEL, so they get rid of Norwegian overnight and have planes to operate a new mega low cost carrier
- Simply take Norwegian planes and transfer them to British Airways (which seems most unlikely, since they’ll no doubt want to have planes they can operate on a lower cost basis, which isn’t happening if the planes fly directly with British Airways)
No matter how you slice it, this takeover would be terrible for consumers.