Business Irish

Saturday 17 August 2019

Aer Lingus owner denies fresh Norwegian bid after turbulence

Rumour mill: A report says IAG may look to revive its interest in Norwegian
Rumour mill: A report says IAG may look to revive its interest in Norwegian
John Mulligan

John Mulligan

Aer Lingus owner IAG said it had no plans to revive last year's bid for Norwegian Air Shuttle, after a Spanish media report that an offer was likely to be made in the next 15 days.

IAG, headed by Willie Walsh, also owns BA and Iberia in Spain. It bought a 4.6pc stake in Norwegian last year and said it was interested in buying it outright, but moves towards a deal petered out and were abandoned by the firm in January.

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Yesterday, Spain's Okdiario said IAG intended to make an approach worth about $1.2bn (€1bn), based on a share price of NOK70-85, almost double Norwegian's current market value of $652m. Okdiario said JP Morgan was advising on the deal. Norwegian shares rose 12pc. However, IAG rejected the report.

"We have said many times in the past few months that we are no longer interested in Norwegian Air," IAG's spokeswoman said. "Nothing has changed."

Norwegian, which declined to comment, rejected two offers from IAG as undervaluing its business.

But Norwegian has become vulnerable amid a cash crunch and mounting losses, following one of the fastest expansions in European airline history, as it sought to extend its low-cost model into long-distance markets.

The Scandinavian company was forced to close routes and sell off aircraft before billionaire John Fredriksen underwrote a NOK3bn rights issue in February to shore up its finances.

Bjorn Kjos, Norwegian's founder and chief executive, who turns 73 on July 18, has asked the board to seek a successor, while his long-time ally, chairman Bjorn Kise, retired in May, having been seen as a potential obstacle to any future deal.

Results this week showed Ireland-based carrier Norwegian Air International - which is a unit of Norwegian Air Shuttle - posted a loss of $151m last year.

Norwegian has been one of the airlines worst affected by the worldwide grounding of Boeing's 737 Max aircraft.

It took delivery of its first Max 8 jet in 2017 and had 18 of the aircraft in service.

The groundings upended the Irish unit's schedules and network capabilities.

It had to suspend US- bound flights from Cork and Shannon.

Bloomberg

Irish Independent

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