British Airways owner International Consolidated Airlines Group (LON:IAG) and easyJet PLC (LON:EZJ) shares were flying higher on Friday as analysts and investors digested the consequences of restructuring at Norwegian Air.
The Norwegian budget carrier announced plans to scrap its transatlantic flights and instead focus on its short-haul business, as well as the loss of 1,100 pilot and cabin crew at Gatwick airport, a debt-for-equity deal and a highly dilutive equity raise.
“The key read across to other airlines is Norwegian's revised strategic plan, which revolves around retrenching to short haul operations focussed on Norway, the Nordic region and Continental Europe,” said analysts at broker Liberum on Friday.
The discontinuation of the long-haul operations will remove some capacity and competitive pressure on long haul routes for IAG in particular, the analysts added, with British Airways having the most overlap given Norwegian's use of Gatwick as its main long-haul base, though “this will not be felt until after the pandemic”.
Some of Norwegian's Gatwick take-off and landing slots are also being released as part of the restructuring through sales, swaps or surrender.
EasyJet has recently swapped some slots with Norwegian to obtain better-timed slots but as Norwegian accounted for 10% of Gatwick slots pre-pandemic, Liberum said the potential withdrawal from the airport “could open the door to greater competition for easyJet at its largest base”.
However as easyJet has 47% of existing slots that will mitigate the effects, the analysts added.
IAG shares were up 2% to 165.5p in early trading and easyJet was up almost 3% to 846p, up 9% and 10% over two days respectively.