British Airways owner IAG is considering a Norwegian takeover

Seasoned deal-maker Walsh was much quicker than rival full-service airlines Air France-KLM and Lufthansa to embrace budget flying, buying short-haul carrier Vueling in 2015 and setting up IAG's own long-haul low-priced carrier Level previous year.

EasyJet was up 2%, Ryanair up 1.7% Wizz Air 3% after IAG confirmed its position with Norwegian, however.

Adding Norwegian's short-haul operations in Europe to Vueling would create a budget carrier better placed to compete against the continent's two biggest low-priced airlines Ryanair and easyJet.

The group - which owns British Airways, Aer Lingus and Iberia - said it considers the low-priced airline to be an "attractive investment" opportunity.

The shareholding "is meant to establish a position from which to initiate discussions with Norwegian, including the possibility of a full offer for Norwegian".

On Monday March 12 Norwegian's stock was trading at US$22.51. It would also put IAG into the pole position in the long-haul, low-priced market, for which Norwegian has been building a large base at London-Gatwick airport.

Responding on twitter today Norwegian said: "Just been made aware that the International Airline Group (IAG) has acquired 4.6 percent of the shares in Norwegian Air Shuttle ASA".

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Deals have included £99 flights from Edinburgh and Dublin to NY.

"Norwegian believes that interest from one of the largest worldwide aviation groups demonstrates the sustainability and potential of our business model and global growth", it said.

The buy-up caught Norwegian by surprise.

The acquisition of the stake "suggests that IAG feels that there is an opportunity here given the level of the share price, or it could simply be keeping its options open in the event of further difficulties" with Norwegian, said Hewson.

Ryanair last month agreed to buy a majority stake in a new Austrian leisure airline founded by Formula One former champion Niki Lauda, while easyJet bought a parts of failed airline Air Berlin past year.

Shares in Norwegian Air rocketed 18 per cent in Oslo following news of IAG's interest.

  • Ronnie Bowen