This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. For an explanation of our Advertising Policy, visit this page.

The aviation world is waiting to see if, or perhaps when, IAG’s CEO Willie Walsh will float a third offer to purchase Norwegian. The parent company of British Airways and Iberia already owns a chunk of the airline, and has been trying to buy the rest — leaving observers with a question: Why, and why now?

In mid-April, the International Airline Group acquired 4.6% of the shares of Norwegian Air Shuttle ASA. Since then, IAG has made two bids to fully acquire the hybrid low-cost carrier and has been rebuffed both times. Norwegian has dramatically expanded its route map over the past few years, taking advantage of the range capability of its new Boeing 787s and 737 MAX 8s. The airline has disrupted the long-haul model with low fares on attractive routes, and its red-nosed aircraft are regularly appearing at new airports.

But that expansion has come at a financial cost, with the airline reporting a €30 million net loss in 2017, compared to 2016’s €116 million profit.

Is it simply that IAG sees a struggling airline that’s ripe for a takeover, one that’s growing too big, too fast?

“IAG is looking at the bigger picture,” said Henry Harteveldt, travel industry analyst, Atmosphere Research Group. “The primary interest is in the North Atlantic. They weren’t interested in Norwegian when it was primarily just another European low-cost airline.”

“IAG may be asking, ‘If we buy Norwegian, at the right price, do we take out a competitor that could wreak financial harm by charging lower fares than we are able to profitably match?’” Harteveldt said.

The attractive US market is the prize here, and that’s where Norwegian has been growing the fastest. In summer 2017, the airline became the eighth-largest over the Atlantic, a remarkable 42% increase with 245,000 extra seats since summer 2016, according to James Pearson, senior lecturer in Aviation Management at the University of Bedfordshire, UK.

“When added to the capacity of BA, Iberia, and Aer Lingus, clearly IAG would be a very strong force to be reckoned with,” said Pearson.

Pearson believes that the acquisition would give IAG increased strength in confronting competitive low-cost carriers . Looking at a combination of its own European LCC Vueling and Norwegian, “passengers would exceed 60 million and they’d have nearly 280 aircraft between them. This would enable IAG, as a group, to better compete with Ryanair and easyJet, the latter with 173 aircraft in service and 80 million passengers,” said Pearson.

Norwegian 787-9. Photo by Alec Wilson/Flickr.
A Norwegian 787-9. Photo by Alec Wilson/Flickr


But IAG already has a long-haul low-cost carrier: LEVEL, the Barcelona-based airline launched last year precisely to compete with the likes of Norwegian. No big deal, according to Harteveldt. “Those are all Iberia airplanes,” he said. “They would just have to take them into the paint shop and redo the cabin, and within weeks they’re back flying for Iberia.”

LEVEL is a small player, and “there’s no question that British Airways and Norwegian would eventually rationalize routes. For example, BA isn’t going to fly from Gatwick to Oakland against Norwegian, if IAG owns it,” Harteveldt said.

Norwegian’s fleet has an average age of just 3.6 years, according to the airline’s website. Some of these aircraft, along with the airline’s slots at several airports, like London Gatwick, might be highly attractive additions to IAG’s assets. (Slots, or landing and takeoff rights, are a coveted currency at crowded airports.)

Norwegian’s 787s could be integrated into British Airways’ existing 787 Dreamliner fleet, allowing BA to accelerate the retirement of its Boeing 767s and some larger aircraft. The Airbus A321neos that Norwegian has on order would undoubtably find a home with any one of IAG’s airlines, given the group’s preference for Airbus single-aisle aircraft.

Norwegian’s fleet of 737s could stay with the airline, which could continue to operate under IAG’s structure, re-focused on its roots as a regional carrier. However, many of its aircraft are leased, giving the airline some flexibility in managing its fleet. Norwegian also operates its own leasing company, Arctic Aviation Assets.

But fleet planning appears to be in flux. The airline’s current fleet is made up of about 150 Boeing 737-800, 737 MAX 8, and 787-8 and -9 aircraft, and it has 250 Boeing and Airbus planes on order.

In its Q1 2018 financial statement, while noting the increased impact of higher fuel costs, Norwegian stated it would be making changes to its fleet: “The company is also in the process of divesting up to 140 aircraft, including future deliveries, through replacement of older planes and possible sales or transfers into a leasing structure.”

When asked to comment on this seemingly high percentage of its fleet, Anders Lindström, Norwegian’s director of communications, USA, said, “Our expansion plans remain ambitious and unchanged. The divesting of aircraft is only related to ownership.”

The cabin of a Norwegian 737 MAX 8 (Photo courtesy of Norwegian)
The cabin of a Norwegian 737 MAX 8 (Photo courtesy of Norwegian)


It takes people to fly aircraft, and Norwegian — which has different Airline Operating Certificates and 23 operating bases worldwide — contracts most of its staff through OSM Aviation. The airline owns 50% of OSM, a company that provides “total crew management,” according to its website. That outsourced (and for the airline, cheaper) model may not fly under IAG, where workers are paid under a more traditional model.

“I think the labor piece is going to be one of the most contentious, most complicated, most difficult aspect of this acquisition to negotiate,” said Harteveldt.

“Even if IAG were to get rid of labor outsourcing to keep peace with their unions, the unions at BA and Iberia might say to the IAG board, ‘unless you want labor hell that makes what happened at Air France a couple of years ago look like a camp picnic, you’re going to have to play our game.’”

According to Pearson, a deal could take two years to complete if it happens at all. “It would likely face opposition given the size of Norwegian, its presence at a number of key airports Europe-wide, and the trend of consolidation among big airline groups, especially the Lufthansa Group and IAG. I think regulators and unions would be unhappy,” he said.

In the meantime, it appears to be business as usual at both airlines. But Norwegian is clearly keeping the matter in its sights. “The Norwegian Board of Directors has established a steering committee and engaged financial and judicial advisors to review the situation, handle relevant inquiries and to safeguard the interests of all shareholders,” the company stated in its Q1 2018 report.

IAG includes British Airways, Iberia, Aer Lingus, Vueling, and LEVEL. This mix of legacy, hybrid low-cost-carriers and LCCs has around 550 aircraft, flying over 100 million passengers, annually. Its airlines are all members of the Avios rewards program.

Norwegian carried 33 million passengers in 2017, on over 500 routes to more than 150 destinations. Norwegian Rewards is the airline’s loyalty program.

The Platinum Card® from American Express

The American Express Platinum card has some of the best perks out there: cardholders enjoy the best domestic lounge access (Delta SkyClubs, Centurion Lounges, and Priority Pass), a $200 annual airline fee credit as well as up to $200 in Uber credits, and mid-tier elite status at SPG, Marriott, and Hilton. Combined with the 60,000 point welcome offer -- worth $1,140 based on TPG's valuations -- this card is a no-brainer for frequent travelers. Here are 5 reasons you should consider this card, as well as how you can figure out if the $550 annual fee makes sense for you.

Apply Now
More Things to Know
  • Earn 60,000 Membership Rewards® points after you use your new Card to make $5,000 in purchases in your first 3 months.
  • Enjoy Uber VIP status and free rides in the U.S. up to $15 each month, plus a bonus $20 in December. That can be up to $200 in annual Uber savings.
  • 5X Membership Rewards® points on flights booked directly with airlines or with American Express Travel.
  • 5X Membership Rewards points on prepaid hotels booked on
  • Enjoy access to the Global Lounge Collection, the only credit card airport lounge access program that includes proprietary lounge locations around the world.
  • Receive complimentary benefits with an average total value of $550 with Fine Hotels & Resorts. Learn More.
  • $200 Airline Fee Credit, up to $200 per calendar year in baggage fees and more at one qualifying airline.
  • Get up to $100 in statement credits annually for purchases at Saks Fifth Avenue on your Platinum Card®. Enrollment required.
  • $550 annual fee.
  • Terms Apply.
  • See Rates & Fees
Intro APR on Purchases
Regular APR
Annual Fee
Balance Transfer Fee
See Terms
Recommended Credit
Terms and restrictions apply. See rates & fees.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.