IAG is unlikely to launch a new bid for Norwegian, the pan-European group’s chief executive has indicated, but with the caveat that it would “never say never”.
Speaking at the A4E Aviation Summit in Brussels today, Willie Walsh suggested that IAG would have retained its Norwegian stake were a fresh bid imminent, and that its focus had shifted to building the Level operation.
“We’ve fully exited it now,” Walsh says of IAG’s Norwegian holding, which was originally 4.6% before dilution to 3.93%. He assesses the chances of renewed interest in acquiring the Scandinavian operator thus: “I’d never say never, but I think it’s unlikely.”
IAG states in its 2018 annual report that it backed away from the potential Norwegian acquisition because it was not convinced that the budget carrier’s cost base was low enough.
However, Walsh and IAG still “most definitely” believe in the long-haul low-cost model.
“There is a profitable niche there, and we are going to serve it,” he says. “We are committed to expanding Level. It is performing very well in the markets it is operating in.”
Despite the failure to acquire Norwegian, Walsh expresses no regrets over IAG’s efforts in that direction.
“At least we did it,” he says. “I think it was the right thing for us to do to look at it as an option. I would have liked it if we had succeeded in bringing Norwegian into the group but it didn’t work out.
“It’s a pity – I still hope they succeed,” he adds, citing concerns around recent financial challenges faced by Norwegian, particularly regarding fuel costs and hedging.
But Walsh goes on to praise the “exceptional job” done by Norwegian’s chief executive Bjorn Kjos, such as the proof-of-concept work relating to long-haul low-cost operations.
“He’s proven, if not to everybody but certainly to us, that the market exists and the customer will embrace the business model.”