Norwegian and Finnair strike deal for FlyNordic; to link up Asia-based operations

Stockholm, Sweden: Norwegian Air Shuttle ASA on Tuesday has announced that it will buy Finnair PLC's subsidiary FlyNordic, a budget airline based in Stockholm, Sweden. Finnair will receive about 5 per cent of Norwegian's shares and will also retain the option to increase its stake to 10 per cent through 2008.

Finnair bought small Swedish airline FlyNordic in 2003 and turned it into a budget airline. FlyNordic, which carried about 1.2 million passengers last year, will continue to operate under its own name post the latest acquisition.

"This acquisition will strengthen our position in the Nordic region as well as in the European market," Norwegian chief executive Bjorn Kjos said in a statement.

Norwegian has seen a rapid expansion in its activities after changing its business model from being a domestic commuter airline to a low-cost airline with destinations at home and abroad.

It carried 5.1 million passengers last year.

Meanwhile, the agreement between Norwegian and Finnair also includes a closer integration of operations between the two airlines, especially Finnair's expanding network in Asia.

"Norwegian Air Shuttle will open their network to our Asian flights meaning that we do not have to fly to every destination in the North ourselves. At the same time, our network will bring passengers from Asia to Norwegians network in Scandinavia," said Finnair President and chief executive Jukka Hienonen

The deal is subject to regulatory approval.