Will Lufthansa buy Norwegian?

British Airways owner IAG is trying, but has almost given up, now Lufthansa is looking into buying Norwegian Group.

The announcement came as no real surprise, as Norwegian is ripe for a take over. Its losses are horrific – the first quarter of 2018 alone showed it loosing money equal to 31% of the fare paid by every passenger, an appalling burn rate it cannot sustain.

And yet as a group it controls substantial assets in both its existing fleet, and its order book which while leased, is mostly controlled by a Norwegian Group subsidiary, financed by a partly state owned sovereign wealth fund.As a result it’s share price is up – but Lufthansa said it would look for an agreed price, and as long as competition authorities in the EU agreed, it would make an offer. Norway isn’t in the EU but is an EEA member (follows all the EU rules and has full access to EU markets, but no say in how it works), so falls inside EU rules on competition.It’s unlikely Lufthansa would keep Norwegian short haul operations and is likely to merge them with Eurowings. The long haul operation is a different matter and could prove quite lucrative if managed properly. If it happened, and it remains a big if, it would be the only member of Lufthansa group operating the 787.

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