The Norwegian Competition Authority temporarily says no to the purchase of Widerøe by Norwegian Air Shuttle as it wants more time to review Norwegian’s acquisition of its counterpart Widerøe, expressing concerns that the deal could hamper the competition.
Norwegian reached a deal in July to buy WF Holding, owner of Widerøe, for 1.125 billion crowns (about $105 million). At the time, Norwegian CEO Geir Karlsen described the move as “an important milestone in the history of Norwegian aviation”. But Norwegian’s attempt to buy Norway’s third-largest airline, Widerøe, is in danger.
The authority writes in a press release that it needs more time to evaluate the acquisition. The reason is that the Norwegian authority fears that the acquisition will lead to a price increase and worse deals for Norwegian air passengers. Initially, it had set September 15 as the deadline to present a preliminary assessment of the acquisition. The government agency has since decided to extend the deadline by two months, pushing it back to November 17, with a final deadline set at January 3, 2024.
“Our preliminary assessment is that there may be reason to fear that the acquisition will have a negative impact on Norwegian air passengers”declares Katrine Amdam, project manager at the Authority. “In the future, the competition authority will examine the case further to determine whether the acquisition should be prohibited. » Norwegian writes in a stock release that it takes note of the valuation of theNorwegian Competition Authority and that he understands that it requires more time. “ We firmly believe in a positive outcome in the case”, writes Norwegian Managing Director Geir Karlsen in a press release. It is stated that the airline has had “a good and constructive dialogue with the Norwegian Competition Authority”. “We are also aware that they obtained information from third parties. We understand that the Competition Authority needs more time due to the large amount of information and data to be examined,” specifies Geir Karlsen.
The proposed deal is expected to create a stronger competitor to compete with SAS Norwegian Airlines, as it will expand Norwegian’s presence in the Norwegian region. Additionally, it is planned to increase Norwegian’s market share in the business segment and reduce the seasonality of its operations.
According to data from OAG Schedules Analyzer, SAS is the largest operator in the Norwegian domestic market, with a capacity share of 39.1% as of September 2023. Norwegian is the second with 35%, followed by Widerøe with 24.7%.
Norwegian’s national network expands this month to 17 routes, most of which touch Oslo Gardermoen Airport, as well as to hubs used by Widerøe, such as Bergen, Trondheim, Bodø and Tromsø. Widerøe, meanwhile, is offering 77 inland routes this month, connecting small communities in the north and the fjords. Many routes pass through agreements ofpublic service obligation with the Norwegian government. Remember that Norwegian has a all-Boeing fleet 737 (68 737-800, 13 MAX 8), while Wideroe has 48 Dash-8 Q400 and D’Embraer E2.