British Airways Wants to Buy Norwegian – So It Can Raise Transatlantic Airfares

Back in April British Airways parent company IAG acquired just under 5% of Norwegian and started talks to acquire the discount carrier. I assumed that acquire meant smother it so that the airline wouldn’t keep depressing transatlantic fares, especially out of cities like London.

Norwegian has faced rising costs and some argued they lacked the cash to keep going. They just agreed to sell 5 Airbus A320neos to raise cash.

Copyright william87 / 123RF Stock Photo

On Friday former British Airways CEO and current head of parent company IAG said that they’ve twice been rebuffed in their attempts to buy Norwegian, that they are still interested, though suggested that interest would wane (message to Norwegian: take a deal while you still can).

Willie Walsh also confirmed my suspicions about what a deal for Norwegian would mean for their transatlantic flying: he’s interested in the short-haul European route network and not their flights to the U.S.

The CEO says the carrier’s European network is especially attractive, and though he cautions that his company’s interest “wanes over time,” he still appears enthusiastic.

“I’m getting updates. There’s a lot happening in that company. It’s an opportunity, especially if you look at the short-haul network. But we would only do it if we thought that would generate returns that can match.”

They’ll talk up the deal as it relates to intra-Europe opportunities but what I hear is the profit from the deal comes from higher fares across the Pond. IAG does have their own low fare subsidiary LEVEL, started largely in reaction to Norwegian and similar carriers. Air France has one too — something their new CEO is questioning.

Meanwhile Walsh also expressed the seriousness of Qatar’s threat to leave oneworld with the rather absurd claim that Qatar Airways CEO Akbar al-Baker “doesn’t say these things without being genuine.” Qatar is the largest owner of IAG.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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