Business Irish

Friday 19 July 2019

Norwegian shares sink as IAG ditches buyout plan

Bjorn again: Willie Walsh (left) and Bjorn Kjos. Mr Walsh said this week that he admired the Norwegian brand and believes the airline will survive in some form
Bjorn again: Willie Walsh (left) and Bjorn Kjos. Mr Walsh said this week that he admired the Norwegian brand and believes the airline will survive in some form
Swift end: IAG set to sell off its 3.93pc stake in low-cost Norwegian
John Mulligan

John Mulligan

SHARES in Scandinavian airline Norwegian plunged as much as 26pc yesterday after Aer Lingus owner IAG confirmed it won't make an offer for the struggling low-cost carrier.

IAG's announcement comes nine months after it bought a 4.61pc stake in Norwegian and indicated that it was interested in buying the airline outright.

But IAG chief executive Willie Walsh had grown frustrated at the lack of progress on any talks. He stressed again just last weekend in Dublin that he didn't intend to get caught up in any bidding war for Norwegian.

Mr Walsh had also hinted that the decision on Norwegian was imminent, saying last Sunday that while he admired the brand, "our interest is time-limited and price-limited".

He added: "We have a choice… we can grow organically, and that's what we're doing through Level [IAG's low-cost operation], or we can grow inorganically through an acquisition." IAG said it will dispose of its 3.93pc stake in Norwegian "in due course".

IAG's stake had been diluted after Norwegian raised equity in the last year. Norwegian, headed by chief executive Bjorn Kjos, insisted yesterday that its plans and strategy remain unchanged.

"The company's goal is to continue building a sustainable business to the benefit of its customers, employees and shareholders," said chairman Bjorn Kise.

Earlier this week, Mr Kjos' brother Tore, who's a shareholder in a vehicle that owns about 25pc of Norwegian, urged the chief executive in an interview with a Norwegian media outlet to seal a deal with IAG.

"Norwegian's finances are already under pressure, and a share sale [by IAG] will put pressure on the stock, making it hard for them to raise money," said analyst Per Hansen of Nordnet.

"They no longer have any margin of error," he added. "If they were to need cash, and no alternative buyers emerge, the stock price could end up looking like a jetliner running out of fuel."

Irish Independent

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