Saturday 18 August 2018

Norwegian shares soar as IAG's move spurs inquiries

Norwegian Air Shuttle chief executive Bjorn Kjos has softened stance on IAG
Norwegian Air Shuttle chief executive Bjorn Kjos has softened stance on IAG
John Mulligan

John Mulligan

Shares in Scandinavian airline Norwegian soared again yesterday after founder and chief executive Bjorn Kjos softened his earlier hostility to an approach from Aer Lingus owner IAG to buy the carrier, and signalled that other potential investors have also been circling the business.

IAG, headed by former Aer Lingus boss Willie Walsh, revealed earlier this month that it had bought a 4.61pc stake in Norwegian and was interested in acquiring the entire airline.

IAG also owns British Airways and Spanish carriers Iberia and Vueling. It also has a fledgling low-cost transatlantic carrier called Level.

But Mr Kjos was initially hostile to the IAG approach, saying that he "hasn't thought about selling at all". Mr Kjos owns 27pc of stock market-listed Norwegian.

But as Norwegian published first quarter results yesterday, Mr Kjos told Bloomberg TV that although the Norwegian board might not back a takeover based on the airline's current market valuation, "there's a saying that if the price is right, everything is for sale".

Shares in Norwegian were more than 17pc higher near the close in Oslo yesterday, giving it a market capitalisation of 13.6bn krone (€1.4bn). IAG paid €1.36bn in 2015 to buy Aer Lingus, which was profitable.

Norwegian also said that it has "received several inquiries" following IAG's approach.

"Although these inquiries may not be as serious as IAG's, interest from other parties could drive IAG's acquisition price higher," noted Davy Stockbrokers.

"The Norwegian board of directors has established a steering committee and engaged financial and judicial advisers to review the situation, handle relevant inquiries and to safeguard the interests of all shareholders," noted Norwegian yesterday.

IAG said this month that it considers Norwegian to be an "attractive" investment.

"The minority investment is intended to establish a position from which to initiate discussions with Norwegian, including the possibility of a full offer for Norwegian," it said.

Mr Kjos said he's happy to have IAG as an investor and intends to act in the best interests of all shareholders.

Norwegian has become a target as it grapples with a stretched balance sheet after splurging on the planes needed to compete with the likes of Ryanair on European routes while establishing a pioneering discount operation in the transatlantic market.

The company said that additional capital, including a share placing this quarter, is poised to "boost competitiveness and protect existing and future investments," while confirming that a programme of aircraft divestment will extend to as many as 140 jets, raising further funds.

Norwegian took delivery of six new Boeing 787-9 Dreamliners and two brand-new Boeing 737-800 aircraft in the first quarter of the year.

The airline started flights from Ireland to the United States last year.

Norwegian ordered 200 new-generation narrow-body jets in 2012, split equally between Boeing and Airbus models, but plans to standardise its short-haul fleet around Boeing's 737 jets and take only some Airbus aircraft.

That has left 70 Airbus A320s free for sale before they're even delivered, as well as older planes Norwegian no longer needs. (Additional Reporting: Bloomberg)

Irish Independent

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