The Atlantic Update – Wednesday 20 June 2018

The Atlantic Update is published every Wednesday morning at 06:00 BST, providing a weekly bulletin on developments on transatlantic travel between Europe and North America.

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Norwegian Boeing 787-9 Dreamliner
Norwegian Boeing 787-9 Dreamliner

Hello and welcome to the The Atlantic Update for Wednesday 20 June 2018, providing a weekly bulletin on developments on transatlantic travel between Europe and North America. The Atlantic Update is published every Wednesday morning at 06:00 BST.

Does Lufthansa really want to buy Norwegian?

Interest in the possible sale of Norwegian was piqued earlier this week after Lufthansa revealed it had held discussions with the airline about a possible bid.

It appears that no offer has been tabled. Lufthansa Group CEO Carsten Spohr made only vague comments about ongoing consolidation in Europe. Lufthansa is of course no stranger to low cost travel. It has transferred all short-haul operations outside of its Frankfurt and Munich hubs to Eurowings. It has also launched low cost long-haul routes under the Eurowings brand, but has stayed firmly in its home territory at cities such as Cologne and Dusseldorf.

This is in sharp contrast to both Norwegian and IAG’s own low cost long-haul brand LEVEL which have sought to become true pan-European brands.

Lufthansa buying Norwegian would give it a substantial presence at Gatwick. And this would not the first time Lufthansa has gained a strong foothold in London. It acquired full control of bmi British Midland in 2009, albeit not entirely at a time and price of its choosing. Its former owner Sir Michael Bishop exercised an option to sell the airline to Lufthansa that had previously been agreed in 1999. Three years later, after heavy losses and many cash injections through debt for equity swaps, Lufthansa sold bmi to BA’s parent company IAG and substantially weakened the Star Alliance in London in the process.

Whoever takes over Norwegian will need to undertake aggressive action to improve its financial performance. IAG would probably retain the Norwegian brand and it has indicated it would keep its existing customer proposition in tact. What IAG would probably do is curtail its growth ambitions, refocus the route network on profitable flying and transfer many back office functions to its internal Global Business Services platform. It is not so certain that Lufthansa would be able to do this with the same vigour. It is also uncertain whether Lufthansa would have the appetite to compete at Gatwick where BA has already made a number of competitive moves against Norwegian.

Fort Lauderdale Runway Closure

The Associated Press reports that Fort Lauderdale airport is to close one of its two runways for five months from June 2019.

During this time all arriving and departing flights will have to use the south runway. This is likely to lead to a reduction in flights to the airport of around 20-25%.

Also of note this week:

Alaska Airlines announces the launch of a three times weekly service from Sacremento California to Kona Hawaii from Thursday 20 December 2018 (Alaska Airlines)

American Airlines’ American Eagle Regional operator PSA Airlines which has bases in Charlotte, Philadelphia, and Washington seeks to recover from substantial disruption caused by IT issues. (American Airlines)

A select group of United Airlines passengers bid one final farewell to the Queen Of The Skies. (United)

Late Post Publication Updates:

[Reseved for updates during the day.]

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