Norwegian’s shares rose as much as 12% after Lufthansa CEO Carsten Spohr said his airline was “in contact” with the LCC.

Spohr cautioned that any deal would depend on price, strategic merits and approvals by competition authorities, but investors clearly hoped the comments could revitalize the idea of a takeover of Norwegian by a larger airline group.

Norwegian said June 18 the airline has received expressions of interests by several parties to acquire shares, a full takeover, financing or various forms of partnerships, all of which show “the attractiveness of our business.”

Norwegian posted a NOK2.2 billion ($269 million) operating loss in the first quarter equivalent to a minus 31% operating margin. The growing losses come as the airline expanded capacity by 36% in the same period, mainly on its transatlantic long-haul network.

Some believe the current course is no longer sustainable. “The original plan is unattainable, restructuring unavoidable,” Bernstein Research airline analyst Daniel Roeska said. He expects Norwegian to reduce its growth ambitions substantially.

Roeska said that “without more cash and equity Norwegian will not survive.” Bernstein calculates that Norwegian needs to cover up to $1.46 billion in capital expenditure over the next two years as it grows its Airbus and Boeing fleets.

The carrier has orders in place for 95 Airbus A320neo family aircraft, 110 Boeing 737 MAX and 16 787s. Seven MAXs and nine 787s have been delivered. The airline also has a substantial fleet of leased 787s.

Roeska also argues that “long-haul, low-cost is not working for Norwegian. A dilutive mix-shift between short- and long-haul flying is causing operational performance to deteriorate significantly.” He estimates the airline faces an operating loss of up to NOK8.2 billion ($1 billion) over the next three years. Roeska believes Norwegian is losing up to $29,000 per long-haul flight because of weak yields, lack of feeder traffic and business traveler demand.

The airline’s long-haul network is almost entirely focused on the North Atlantic because Norwegian has not been able to secure Russian overflight rights it needs to open potentially more lucrative services to China.

Lufthansa is the second airline group to publicly express an interest in Norwegian, following International Airlines Group (IAG), which bought a 4.6% stake in the low-fare carrier in April and said it wanted to open discussions that include the possibility of a full takeover. Norwegian CEO Bjørn Kjos has rejected two IAG takeover offers since then.

IAG carriers British Airways, Spanish LCC Vueling and Ireland flag carrier Aer Lingus have significant network overlap with Norwegian, including at London-Gatwick, whereas Lufthansa hardly competes with the airline. While that would make a takeover more likely to be approved without too burdensome antitrust limitations, Lufthansa would also not have the benefit of reduced competition in a part of its network.

The group is also busy with integrating parts of now defunct airberlin into Eurowings, a task that is proving to be more challenging than anticipated. Eurowings is suffering from large-scale operational disruptions because of an aircraft shortage. A wet-lease deal with LaudaMotion was ended prematurely after Ryanair invested in a minority stake in the Austrian airline.

Spohr said during the IATA AGM in Sydney early June that his company ought not to miss opportunities for consolidation regardless of timetables.

Jens Flottau, jens.flottau@aviationweek.com