IAG purchases stake in Norwegian

jjbrien

Deleted User wrote: »

4.6% share purchase by IAG confirmed by NAX

Really dont need a big monopoly happening IAG is starting to own too much of the airline market in Europe, I can see the European Commission jumping on this if they do try to bring NAX into IAG

Idbatterim

jjbrien wrote: »

Really dont need a big monopoly happening IAG is starting to own too much of the airline market in Europe, I can see the European Commission jumping on this if they do try to bring NAX into IAG

I agree totally ! Absolutely do not want to see this happen! First Aer lingus, possibly norwegian next, great!

Like the bloody duopoly of ryanair or aer lingus on most popular destinations! With the uk to the popular sun routes for example, you would have ryanair, easyjet, monarch, thomas cook, others also probably. Suppose thats the problem when there is only one airport of any scale in the country, and its Ryanairs homeground...

Locker10a

Surly it’s better than Norwegian going bust ? Under IAG Norwegian would still have a place in the market to serve, granted some adjustments would probably be needed to cull the major losses. But generally IAG seem to leave their member airlines to do their own thing provided it’s not commercial suicide.
I think IAG are lacking in the Scandinavian market and probably see this as an opportunity to tap into that market while also expanding in their already strong markets of the U.K., Spain and Ireland.

Jamie2k9

Apart from Spain the EU will require few concessions if it goes ahead.

jjbrien

Locker10a wrote: »

Surly it’s better than Norwegian going bust ? Under IAG Norwegian would still have a place in the market to serve, granted some adjustments would probably be needed to cull the major losses. But generally IAG seem to leave their member airlines to do their own thing provided it’s not commercial suicide.
I think IAG are lacking in the Scandinavian market and probably see this as an opportunity to tap into that market while also expanding in their already strong markets of the U.K., Spain and Ireland.

True but would have preferred someone like Air France KLM, Lufttansa, Ryanair etc instead, as this could lead to IAG and oneworld controlling 80% of the transatlantic traffic out of Ireland

Locker10a

jjbrien wrote: »

Locker10a wrote: »

Surly it’s better than Norwegian going bust ? Under IAG Norwegian would still have a place in the market to serve, granted some adjustments would probably be needed to cull the major losses. But generally IAG seem to leave their member airlines to do their own thing provided it’s not commercial suicide.
I think IAG are lacking in the Scandinavian market and probably see this as an opportunity to tap into that market while also expanding in their already strong markets of the U.K., Spain and Ireland.

True but would have preferred someone like Air France KLM, Lufttansa, Ryanair etc instead, as this could lead to IAG and oneworld controlling 80% of the transatlantic traffic out of Ireland

Ideally then the competition authorities will stipulate that a certain percentage of that market must be open and available to outside parties from separate alliances or airline synergies

LXFlyer

jjbrien wrote: »

Really dont need a big monopoly happening IAG is starting to own too much of the airline market in Europe, I can see the European Commission jumping on this if they do try to bring NAX into IAG

Really??
EI, BA and Iberia/Vueling?

That leaves plenty of other airlines.

jjbrien

LXFlyer wrote: »

Really??
EI, BA and Iberia/Vueling?

That leaves plenty of other airlines.

if you look at the Irish market and Gatwick in London if BA was to take over Norwegian would mean a monopoly for IAG. Ex Dublin they would have a strong hold of the North American to Ireland market meaning high prices

LXFlyer

jjbrien wrote: »

if you look at the Irish market and Gatwick in London if BA was to take over Norwegian would mean a monopoly for IAG. Ex Dublin they would have a strong hold of the North American to Ireland market meaning high prices

That doesn’t mean the whole of Europe as you suggested in your post.

You didn’t mention Ireland and GB - you mentioned Europe.

If they take over NAX then we are back to where we were one year ago in Ireland pre-Norwegian which didn’t feature necessarily exhorbitant fares did it? It could be argued that NAX fares are unsustainable in the long run.

Dublin still has United, American, Delta?

Non-direct with other airlines as before, Air France, KLM, Lufthansa, Swiss, Virgin, etc.

jjbrien

LXFlyer wrote: »

That doesn’t mean the whole of Europe as you suggested in your post.

You didn’t mention Ireland and GB - you mentioned Europe.

If they take over NAX then we are back to where we were one year ago in Ireland pre-Norwegian which didn’t feature necessarily exhorbitant fares did it? It could be argued that NAX fares are unsustainable in the long run.

Dublin still has United, American, Delta?

Non-direct with other airlines as before, Air France, KLM, Lufthansa, Swiss, Virgin, etc.

Amercian is part of Oneworld so its in alliance with IAG
Yes we do have united and delta but that would be the only completion to IAG.

NAX could be profitable long term but they do need to slow down the rate of which they are buying aircraft which at the moment is not good. They now need to make make the money on what they have now.

I remeber Norewegian when they used to operate flights for Braathens which is now part of SAS back then they wouldn't be taking the risks they are now. But they have changed the face of transatalntic air travel. They would be of more interest to Ryanair with their 737 fleet.

john boye

jjbrien wrote: »

True but would have preferred someone like Air France KLM, Lufttansa, Ryanair etc instead, as this could lead to IAG and oneworld controlling 80% of the transatlantic traffic out of Ireland

Personally I think I think if this goes through then we'll see those 737 TATL routes at least massively scaled back if not completely scrapped. If they're buying Norwegian then they're doing it to make money, not keep them going on life support.

Locker10a

john boye wrote: »

jjbrien wrote: »

True but would have preferred someone like Air France KLM, Lufttansa, Ryanair etc instead, as this could lead to IAG and oneworld controlling 80% of the transatlantic traffic out of Ireland

Personally I think I think if this goes through then we'll see those 737 TATL routes at least massively scaled back if not completely scrapped. If they're buying Norwegian then they're doing it to make money, not keep them going on life support.

They way I see it is those(or any routes) that aren’t making enough profit will be scraped or scaled back either by IAG, or eventually by Norwegian themselves when they get desperate enough.
They most likely aren’t sustainable, at least not at the cost they are selling tickets.
If you consider the cost of using brand new 737s transatlantic vs how Ryanair would use a brand new 737.
Norwegian will get one flight per day out of the aircraft, with that flight comes one opportunity to sell ancillary revenues, seat selection, bags, meals etc
Short haul low cost model like Ryanair would operate 6-8 flights per day in some circumstances. So they have 6 opportunities to sell the same seat, 6 opportunities to sell, extra bags, seats, priority boarding, meals/drinks/duty free etc.
So you can see why low cost long haul is a very difficult market to make money in and many routes Norwegian are trying probably don’t make much profit if any

Irish Steve

There is an advantage for long haul operators, the number of cycles on the airframe are massively reduced, which has huge implications for maintenance costs over time, as many components on the aircraft are changed based on the number of cycles rather than hours flown. It was one of the issues that caused Aer Lingus so many problems with their 747's back in the day, a flight from London to New York did 2 cycles per day, a flight from Dublin to New York that has to go into Shannon twice because of the rules did 4 cycles per day, which doubled some maintenance costs.

Locker10a

Irish Steve wrote: »

There is an advantage for long haul operators, the number of cycles on the airframe are massively reduced, which has huge implications for maintenance costs over time, as many components on the aircraft are changed based on the number of cycles rather than hours flown. It was one of the issues that caused Aer Lingus so many problems with their 747's back in the day, a flight from London to New York did 2 cycles per day, a flight from Dublin to New York that has to go into Shannon twice because of the rules did 4 cycles per day, which doubled some maintenance costs.

But aren't modern build 737s designed and built on the basis of being multi-sector short haul work horses, and thus have very high lifetime cycles.
I dont believe that its more economical to fly a 737 less than it is to use it multiple times per day, the profit made flying an aircraft on 6/7/8 sectors per day must heavily exceed the cost of maintenance checks, otherwise airlines wouldn't do it.
Airlines like Ryanair and Southwest live by the mentality "an aircraft on the ground isn't making money". If it cost more to fly these planes so much then these type of airlines wouldn't exist.
Id also imagine the 1970 era 747s used by EI in the 70s/80s were not at all designed for multiple sector days like modern 737s and thus high maintenance costs ensued.

Captain_Crash

I haven't seen a thread on IAG's latest move. Considering the ownership of EI, and DY's presence in the DUB market (on both LH and SH routes) I think it deserves a thread of its own.

https://www.ft.com/content/8a7f88ce-3e53-11e8-b7e0-52972418fec4

Should IAG go ahead and make an takeover offer, what implications, if any may this have on EI and to a greater extent the DUBhub?? Interesting times ahead.

https://www.boards.ie/vbulletin/showthread.php?t=2057742365&page=11

Captain_Crash

Deleted User wrote: »

https://www.boards.ie/vbulletin/showthread.php?t=2057742365&page=11

I was speaking specifically about IAG's share purchase, and possible take over. Hence saying it deserves its own thread instead of derailing the existing pre-clearance thread.

jjbrien

Captain_Crash wrote: »

I was speaking specifically about IAG's share purchase, and possible take over. Hence saying it deserves its own thread instead of derailing the existing pre-clearance thread.

Already been discussed at length in the other thread

Captain_Crash

jjbrien wrote: »

Already been discussed at length in the other thread

Oki Doki....

@Mods, feel free to delete this thread.

roundymac

Keep it going, it will have implications for Dublin, could also be the end of Cork's T/A dream.

Locker10a

roundymac wrote: »

Keep it going, it will have implications for Dublin, could also be the end of Cork's T/A dream.

As I was saying in the other thread, the 737 transatlantic routes from Ireland will either fail or succeed irregardless of IAG.
IAG if anything have given Norwegian a boost here, they have told the industry their business has some viability at a time when they were on the brink of failure.
It may now be easier for Norwegian to secure further much needed investment.
If, and it’s unlikely in my opinion, IAG do manage to purchase or acquire Norwegian then they will either cull or cut back loss making routes, including those from Ireland. But if those routes aren’t working anyway then they’d have the same fate with or without IAG. Norwegian themselves have already scaled back their Cork flights.
IAG are a multi-national group and their interest is in profit, they tend to leave their member airlines to run as they wish, Vueling, BA, Iberia and Aer Lingus all do their own thing, in their own way, I don’t see how Norwegian would be treated differently provided they are performing well.
I believe if Norwegian did go to IAG they would refocus it and use it to expand in new markets, I don’t think it would be a bad thing for Norwegian and I don’t believe they’d disappear. Some routes would be changed/dropped/increased etc including some from Ireland I’m sure. But as I say this would have to happen eventually anyway, it’s just Norwegian don’t tend to have good planning and in many cases flog a dead horse for to long when they could have cut their losses and grabbed a new opportunity.

kevinandrew

Not entirely a shock, I think a few major airlines could smell blood and were circling Norwegian for a while but I am surprised IAG decided to bite first. Maybe they decided to get in their first before the likes of Ryanair or Lufthansa became interested?


The wider business is probably very attractive, young fleet and lots of overlapping markets for IAG to consolidate or expand on, particularly at London Gatwick and in Spain either with the continued Norwegian brand or as the new Level brand. Norwegian's short haul network is often forgotten but it's largely successful, particularly in their home Scandinavian market and they've also got a modest short haul base at Gatwick, something British Airways will be benefit from in a take over scenario. 


The downsides are obvious, rapid expansion never ends well and with rising debt, rising costs and mounting losses in a time when everyone else is doing very well, there must be a serious flaw in their strategy. Nobody at Norwegian wants to address this, the expansion continues, new aircraft arrive and need to be paid for and capacity is just shifted, never reduced. At the same time we're told forward bookings are excellent, everything is fine and more expansion is to come! If IAG were to purchase Norwegian, they'd have to launch a much needed turn around programme and that's somewhat out of character for IAG, they like healthy, unproblematic airlines and act quickly when one of their airlines show operational weakness, Vueling in 2016 for example. 


As for Ireland, I think the writing is on the wall for most of their Irish routes anyway. I thought cutting Providence in the winter showed some sensible thinking but they've just shifted all the capacity to Stewart and that could prove too much in the low winter months. There's an air of arrogance and Norwegian may have underestimated Aer Lingus slightly in that department. IAG will probably cut anything loss making so goodbye Cork, Shannon and Belfast, the Dublin routes may be profitable but are they profitable enough to let them operate alongside a strong and growing Aer Lingus? 


In a way, IAG may have just saved Norwegian!

Locker10a

https://skift.com/2018/04/13/norwegian-ceo-not-interested-in-selling-to-british-airways-owner/

Good article

L1011

If the airline continues being managed in to the ground he won't have much choice.

Norwegian, as it is currently being run, will go bankrupt fairly soon. They have sold the family silver already and the transatlantic dreams are eating every cent generated by the shorthaul ops.

Locker10a

L1011 wrote: »

If the airline continues being managed in to the ground he won't have much choice.

Norwegian, as it is currently being run, will go bankrupt fairly soon. They have sold the family silver already and the transatlantic dreams are eating every cent generated by the shorthaul ops.

Yep, like the writer said :~ “the deal really is in the hands of the lessors and bankers.”

Let’s see

Captain_Crash

kevinandrew wrote: »

In a way, IAG may have just saved Norwegian!

In an ironic twist, while this may be true of the airline as a whole, it may also be the final nail in the coffin of their TA ops out of Ireland.

Tenger

I moved posts from the Norwegian routes thread over here just to try to keep the possible takeover offering discussion all in one location.

Tenzor07

I've heard the expansion out of SNN is still happening for the Red Noses, so we'll wait and see what happens from now..

Blut2

kevinandrew wrote: »

The downsides are obvious, rapid expansion never ends well and with rising debt, rising costs and mounting losses in a time when everyone else is doing very well, there must be a serious flaw in their strategy. Nobody at Norwegian wants to address this, the expansion continues, new aircraft arrive and need to be paid for and capacity is just shifted, never reduced. At the same time we're told forward bookings are excellent, everything is fine and more expansion is to come! If IAG were to purchase Norwegian, they'd have to launch a much needed turn around programme and that's somewhat out of character for IAG, they like healthy, unproblematic airlines and act quickly when one of their airlines show operational weakness, Vueling in 2016 for example.

The rapid expansion shouldn't be much of a problem if IAG do take Norwegian over. The reason Norwegian are being forced into expanding into these fringe markets currently is because they have to use their massive order book of planes somehow, so they're a bit desperate. If IAG owned them I'd imagine the surplus planes would be re-routed to BA/Aer Lingus/whoever could use them best.

With the fringe/marginal routes cut, and no pressure to rapidly expand due to the orderbook, I'd imagine Norwegian would be a lot healthier.

kevinandrew

Norwegian media reporting that IAG is looking to Ryanair to make a joint bid for Norwegian. 

http://www.aero.de/news-29168/Medien-IAG-prueft-Bietergespann-mit-Ryanair-fuer-Norwegian.html

If this were to happen, and it's a big if, you can bet they'd carve Norwegian up between them with IAG getting the long haul and Ryanair taking the short haul. The brand would almost certainly disappear, I don't think Ryanair would ever want to operate a dual brand organisation, I know they claimed they would with Aer Lingus but I've always believed they would have gradually closed Aer Lingus down over a five year period. 

IAG could maintain the Norwegian brand but I don't see what it adds to them, it's not as well known as you might think, especially in the new markets its entered recently. Aer Lingus can do everything Norwegian does from Ireland but do it better and at a profit while British Airways can do it from London and Iberia from Spain. In the long haul low cost segment they've created Level, a neutral brand that is already gaining traction in the market despite being so young. Yes it's even less known than Norwegian but it's generic and flexible, Level can go anywhere as a brand but Norwegian is starting to find it hard in Spain and Ireland and its short haul struggles at London Gatwick too due to brand awareness.

Bussywussy

I'd hate to be Norwegian staff with IAG coming in.cut cut cut

kevinandrew

Bussywussy wrote: »

I'd hate to be Norwegian staff with IAG coming in.cut cut cut

With Norwegian continuing to haemorrhage money they may not have much choice but the idea of Wille "the slasher" Walsh and Michael O'Leary as your new bosses would send a shiver down anyones spine!