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Looks Like Lufthansa Wants to Buy Norwegian, Too

June 18, 2018
3 min read
Interntional flights lanndin Kastrup Copenhagen Denmark
Looks Like Lufthansa Wants to Buy Norwegian, Too
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Norwegian Air is a hot commodity. After two rejected bids to acquire it from IAG, British Airways' parent company, now Lufthansa is after the low-cost airline as well.

Norwegian has already rejected two bids from International Airlines Group earlier this year, and now Lufthansa CEO Carsten Spohr says his group is "in contact" with Norwegian about a possible acquisition.

"In Europe, everyone is talking to everyone," Spohr, who leads the biggest airline group in Europe by passengers carried, told a German newspaper on Monday. "There's a new wave of consolidation approaching. That means we are also in contact with Norwegian."

In April, IAG — the parent company of British Airways, Iberia, Aer Lingus and others — announced that it had acquired a 4.61% stake in Norwegian Air, which prompted rumors of a possible complete takeover. But, Norwegian's board said in May that it had unanimously rejected two bids from IAG.

A third bid from IAG of 1.52 billion euro (~$1.79 billion) to acquire Norwegian was rumored to be in the works near the end of May, but it is unclear if that ever materialized. IAG's CEO Willie Walsh also said in May the company would not get into a bidding war for Norwegian.

Since IAG acquired its original 4.61% of Norwegian, the low-cost carrier's CEO said the airline had been approached by several parties interested in an acquisition. "We are happy to have IAG as an investor," Norwegian CEO Bjørn Kjos said at the time. "Needless to say, they are not the only interested party that has approached us."

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Low-cost carriers across Europe have been struggling as higher fuel prices and labor difficulties put stress on their bottom lines, which is raising the possibility of merging with larger airlines. Norwegian is no exception to these financial struggles. The carrier reported a net loss of €30.8 million in 2017, compared to a €116 million profit in 2016, and it has been forced to lease aircraft from other operators due to ongoing issues with the Rolls-Royce Trent 1000 engines on its Boeing 787s.

Lufthansa's Spohr told Reuters that as low-cost carriers face financial hardships, the airline group would grab acquisition opportunities as they arose. But so far, Lufthansa is playing its cards close to the vest — it is not exactly clear how interested the German-based aviation behemoth is in a deal for Norwegian.

"Takeovers are always a question of strategic value, the price and anti-trust," Spohr told the German newspaper. "There are no easy answers."

Featured image by Corbis via Getty Images