Norwegian Air scuttles IAG’s takeover attempt
london — British Airways-owner IAG is considering its options after Norwegian Air Shuttle rebuffed two takeover advances, IAG said on Friday, warning some airlines will struggle to survive as fuel prices rise.
IAG, which confirmed its position as one of Europe’s strongest airline groups with a 75 per cent jump in quarterly profit, said it had held talks but could not reach an agreement with low-cost carrier Norwegian on a deal.
Norwegian, which has shaken up long-haul rivals by offering cutprice transatlantic fares, said in response it had received two conditional proposals for a full takeover from IAG, but had rejected them because they undervalued the company.
IAG appeared happy to wait before making its next move.
“We’ll have a look at all of our options in relation to Norwegian,” chief executive Willie Walsh, a seasoned dealmaker, told analysts on a call.
He said that, in general in Europe, he expected to see weak carriers being especially hurt by rising fuel prices. “I wouldn’t be surprised to see a few of these weaker carriers slip further into difficulties and potentially see some exits from the market in the latter part of this year.”
Walsh was downbeat on Norwegian’s future. When asked by an analyst whether loss-making Norwegian could execute its current growth programme as a standalone business, he said: “no”.
IAG bought a 4.6 per cent stake in Norwegian in April with a view to starting takeover discussions. Norwegian said in late April that a number of groups had made advances since IAG bought its stake.
IAG’s moves came after Norwegian had to issue new shares in March to try to shore up its balance sheet and help it weather higher costs and deepening losses as it gambles on a huge expansion of its low-cost long-haul business.
“It is likely that it [IAG] refused to offer a huge premium — the defiant rejection by Norwegian suggests the intersection between what a rational IAG will pay for a heavily loss-making airline, and what the Norwegian board considers acceptable, is very small, or likely non-existent,” said Bernstein analyst Daniel Roeska. —