© Reuters. FILE PHOTO: Norwegian Air Sweden Boeing 737-800 plane SE-RRJ approaches Riga International Airport in Riga, Latvia January 17, 2020. REUTERS/Ints Kalnins/File Photo
OSLO (Reuters) -Norwegian Air has agreed to buy domestic peer Wideroe for 1.13 billion crowns ($106 million) as the reborn airline looks to strengthen its position in its home region.
The deal is the latest reshuffling in the Norwegian airline sector that saw newcomer Flyr file for bankruptcy in January having failed to raise enough cash to survive the winter season.
“The transaction is expected to provide significant benefits for travellers, employees and shareholders, and to strengthen the combined Norwegian and Wideroe as a key part of critical domestic infrastructure,” Norwegian Air said in a statement.
Privately-held Wideroe, Scandinavia’s largest regional-only airline, serves short-haul routes in a sparsely populated region with few train lines and challenging geography.
An important part of the regional infrastructure, Wideroe owns 40 Bombardier (OTC:) 8 aircraft, and three Embraer E190-E2 jets, with seat numbers in each plane ranging from 39 to 110.
The deal comes only two years after Norwegian Air emerged from bankruptcy protection with a smaller fleet and its debt almost wiped out, having raised cash. It has since increased its fleet from 51 aircraft to 81 Boeing (NYSE:) 737-800s and 737 MAX 8s.
Norwegian Air said the two carriers had very limited overlap on routes, and it saw potential annual synergies from the acquisition of 200-300 million crowns ($18.8-28.2 million).
It said it expected to close the deal by the end of the fourth quarter and would finance it through available funds. The companies will continue to operate under separate brands.
($1 = 10.6457 Norwegian crowns)