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Thursday, July 18, 2024

Now Lufthansa is eyeing Norwegian

UPDATED: Stock in Oslo-based Norwegian Air was taking off once again on Monday, after Lufthansa said it was evaluating a possible takeover of Norwegian Air. Norwegian Air’s founder and boss Bjørn Kjos confirmed he’s had direct contact with his counterpart at Lufthansa over “interest” that can pit the giant German carrier against the Spanish and British firm International Airlines Group (IAG), which owns British Airways.

Norwegian Air’s founder and CEO Bjørn Kjos has a lot to think about these days, with not only IAG but also Lufthansa among those “in contact” over a possible “consolidation.” PHOTO: Norwegian Air

“I know that they (Lufthansa) have been in talks with the advisers we have,” Kjos told Norwegian Broadcasting (NRK) Monday afternoon. “I have spoken with Carsten Spohr (Lufthansa’s CEO) myself, he’s a very nice guy. I have texted with him, so I know they’ve been in contact.”

Norwegian Air had stated last week that it was in contact with others interested in buying the airline that started out offering shuttle service on Norway’s West Coast. It has since evolved into a domestic, European and now intercontinental carrier emphasizing low fares.

On Monday its share price was up more than 10 percent, to nearly NOK 274 by early afternoon, and it was clearly the most active on the Oslo Stock Exchange. Norwegian’s stock has been in play since IAG confirmed earlier this spring that it had acquired around 5 percent of the airline’s shares and wanted to discuss a merger or acquisition. Norwegian Air’s founder, CEO and major shareholder Bjørn Kjos was not receptive, however, and the share price later fell back down from highs over NOK 300 to less than NOK 250 heading into the weekend.

It came alive again Monday morning after German newspaper Süddeutsche Zeitung reported on Lufthansa’s interest in Norwegian. Lufthansa’s CEO Spohr had told the paper that a wave of consolidation was sweeping over the low-fare segment of the airline industry, and “that means we are also in contact with Norwegian.”

Kjos, who still holds a controlling block of stock himself, claimed the takeover interest in Norwegian Air is a good sign they’re doing something right at the airlines. He called IAG’s initial approach “completely unexpected” since “we haven’t advertised anything being for sale … but as a result (of IAG’s interest) “many others” have come on the scene, too. He wouldn’t say who, other than that “Lufthansa is one of them.”

Oslo-based newspaper Dagens Næringsliv (DN) reported that Lufthansa’s interest brings Norwegian Air closer to being the target of a bidding war. Norwegian Air officials were otherwise staying mostly mum, refusing to comment on Lufthansa’s interest. “We can only confirm what we have said earlier, that several players have reported interest in the past few months,” Norwegian Air spokesman Lasse Sandaker-Nielsen told DN.

Lufthansa’s interest raises questions because it’s a major carrier within the Star Alliance of cooperating airlines that also includes large airlines and intercontinental carriers like United Airlines of the US. Norwegian’s arch-rival Scandinavian Airlines (SAS) is also a member of Star Alliance, with SAS and Lufthansa cooperating on several routes and serving as feeders for one another. Bringing Norwegian into the fold could make for an unusual new alliance, not least since Lufthansa, SAS and United are among traditional long-haul carriers having to compete against the lower-cost, lower-fare airlines.

Martin Stenshall, an airline analyst at Danske Bank Markets, said that he thinks Spohr’s remarks can “change the game” around Norwegian. He noted that Lufthansa has, during the past few weeks, sent its own team of mergers and acquisitions experts to Norway to examine Norwegian.

“When Lufthansa puts so many resources into the issue, it’s clear their interest is serious,” Stenshall told DN. “The stock market also seems to put a lot into play now.”

Kjos told NRK that he thinks it’s “too early” to sell Norwegian. “Norwegian has so much exciting ahead of it, but that’s my personal opinion,” Kjos said.

IAG’s chief Willie Walsh had told his own shareholders at last week’s annual meeting in Madrid that he and his management team were still “open-minded” about Norwegian, but he denied his company would get involved in a bidding war. Berglund



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