Suitors circle Norwegian after move by BA owner

OSLO: Low-cost airline Norwegian Air Shuttle said yesterday that it had received other approaches after British Airways owner International Consolidated Airlines Group acquired a 4.6% stake in the company.

The airline, which presented its quarterly results, declined to reveal by which firms it was approached, but the announcement helped the stock price soar by 12.41% on the Oslo Stock Exchange in the midday trading. Over one month, share prices have jumped by 74.18%.

“Norwegian has received several inquiries following IAG’s announcement of its acquisition of 4.6% of the shares in the company,” said the carrier in its report, adding it has set up a “steering committee” to examine the situation.

IAG, which also owns Spanish airlines Iberia and Vueling as well as Ireland’s Aer Lingus, announced on April 12 that it would consider a bid to buy Norwegian, which is Europe’s third largest low-cost carrier after Ryanair and easyjet.

Norwegian is one of the few low-cost airlines to have ventured into long-haul flights, which has long been the preserve of major carriers, and has been rapidly adding routes.

But it is also heavily indebted and recently ran into financial turbulence in its bid to rapidly expand.

In March, it raised 1.3 billion Norwegian kroner in a share sale in order to ease financial pressure.

Norwegian has ordered dozens of the latest fuel-efficient aircraft from Airbus SE and Boeing Co as part of its plans to expand in coming years and gain a cost edge against rivals.

It said yesterday that it was considering divesting up to 140 aircraft by putting the newest ones into a leasing structure, which would free up cash, and selling some older ones once it receives newer models.

In the first quarter, Norwegian significantly cut its net loss to 46 million kroner ($5.7 million) against nearly 1.5 billion a year before, thanks to an exceptional capital gain. The operating loss, however, rose to 2.2 billion kroner against 1.7 billion in the first three months of 2017, while revenue jumped 33% to nearly seven billion kroner.