British Airways owner to make bid for transatlantic rival Norwegian

The owner of British Airways has said it is considering making a bid for rival airline Norwegian, amid fierce competition between the two for transatlantic passengers.

International Airlines Group (IAG), formed via the 2010 merger of BA with Spanish flag-carrier Iberia, said it had built up a stake of 4.6% in Norwegian, and that it considered the airline an “attractive investment”.

In a statement to the stock market, IAG said: “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.”

Norwegian’s shares rose by more than 20% on the Oslo stock exchange after IAG confirmed its interest in a takeover, valuing the carrier at nearly £800m.

Norwegian has proved a thorn in BA’s side of late, launching low-cost transatlantic routes and picking up new landing slots at Gatwick as part of global expansion plans.

It has typically been able to undercut traditional airlines by offering passengers the option to forgo services such as reserved seats, an inflight meal and checked baggage.

BA responded by launching its own long-haul no-frills options, as well as a new transatlantic service flying out of Barcelona, called Level.

When IAG was formed, its chief executive, Willie Walsh said he had a shopping list of at least 10 airlines he believed the group could buy in order to expand.

Since then, he has struck deals to take over just three: Spanish low-cost carrier Vueling; British regional airline BMI; and Aer Lingus, the Irish airline where Walsh served as chief executive before moving to British Airways.