International Airlines Group (IAG) acquired a 4.61% stake in LCC Norwegian, a move that could see it take full control later.

IAG said in a statement it considered Norwegian to be an “attractive investment.” The shareholding “is intended to establish a position from which to initiate discussions with Norwegian, including the possibility of a full offer for Norwegian.” IAG said no such talks have taken place so far and that it has not yet made a decision to make an offer.

Norwegian shares rose by 40% in early trading upon the news. The company said it had “no prior knowledge of this acquisition” and “has not been in any discussions or dialogue with IAG about the matter. Norwegian believes that interest from one of the largest international aviation groups demonstrates the sustainability and potential of our business model and global growth.”

Should IAG go ahead with the plan, the deal could be transformative for both companies, as well as the European air transport sector. IAG would become an even bigger player not only in traditional hub flying, but also in the fast-growing European low-fare segment. It would also put IAG into the pole position in the long-haul, low-cost market, for which Norwegian has been building a large base at London-Gatwick airport.

Norwegian has been expanding aggressively, particularly on long-haul routes and, because of the massive expansion, made a loss in 2017 following a profitable 2016. The airline did not immediately comment on the IAG plans. It has holding an extraordinary shareholder meeting on April 13 because of a recent financing round.

Should IAG take control of Norwegian, the deal would raise questions about its internal structure. IAG could decide to merge Norwegian with its existing low-cost unit Vueling and Level, the long-haul, low-cost unit that just started flying. Norwegian’s plans to build a subsidiary in Latin America, Norwegian Air Argentina, may need to be reconsidered since IAG is already an alliance partner with LATAM and is linked to it through common shareholder Qatar Airways.

Lufthansa Group is also expanding its low-cost business through the Eurowings affiliate, but the network is focused mainly on Germany, Austria, Switzerland and Belgium. Air France-KLM has a much smaller low-cost offering, Transavia, growth of which is limited by pilot agreements.

Jens Flottau,