International Consolidated Airlines Group (LON:IAG) has taken up a near five-percent stake in Norwegian Air Shuttle with a view to making an offer for the airline, the British Airways and Iberia parent has confirmed. The news comes amid ongoing consolidation in the European airline market after it emerged earlier this week that easyJet (LON:EZJ) and Lufthansa had submitted bids for Alitalia.
IAG’s share price has fallen into the red in today’s session, having given up 0.68 percent to 611.40p as of 13:42 BST. The stock is underperforming the benchmark FTSE 100 index which has climbed marginally higher and is currently 0.09 percent better off at 7,263.30 points.
IAG takes up stake in Norwegian Air
IAG announced in a short statement to the London Stock Exchange today that it considered Norwegian to be an attractive investment and had acquired a 4.61-percent ownership position in the airline.
“The minority investment is intended to establish a position from which to initiate discussions with Norwegian, including the possibility of a full offer for Norwegian,” the British Airways parent pointed out, cautioning that no such discussions had taken place to date and that it had taken no decision to make an offer at this time.
Norwegian is one of the main competitors to IAG’s new low-cost transatlantic carrier Level.
Analysts weigh in on move
The Telegraph quoted one airline analyst as describing the investment as ‘bolt from the blue,’ who, however, noted that the company closely monitors the operations of all its competitors. Bloomberg meanwhile quoted Goodbody Stockbrokers analyst Mark Simpson as saying that IAG’s move was “an indication of intent in terms of their seriousness” and gave the FTSE 100 company “the platform to enter discussions with clear intentions”.