Norwegian Air Rebuffs Two Takeover Bids From British Airways Owner IAG

Norwegian rejects IAG

When British Airways' parent company purchased 4.6 percent of the Oslo-based carrier, stocks rose over 38 percent, following a year of decline due to stockholders concerns about the airline's profitability.

London-listed shares of IAG were up 5.1% at 673.00 pence, the second best performer on the FTSE 100.

Operating profit in the three months to the end of March soared 75 per cent to €280 million (£247m), traditionally the weakest quarter of the year for the industry. Operating profit after exceptional items soared to EUR919.0 million from EUR141.0 million.

During the period, IAG carried 23.0 million passengers, up 8.5% versus prior year period.

George Salmon, equity analyst at financial services group Hargreaves Lansdown, said: "IAG is adding more passengers, and its planes are taking off with fewer empty seats. That's helping the top line grow nicely", said Hargreaves Lansdown analyst George Salmon.

"But we think the really impressive part of these results is the group's tighter grip on controllable costs". Total fuel cost increased to 4.7% to EUR1.11 billion while operating costs fell 0.4% to EUR4.74 billion.

IAG was built up by M&A but over the a year ago its rival Lufthansa has been at the forefront of consolidation in Europe, snapping up Brussels Airlines and parts of insolvent Air Berlin to gain exposure to the competitive low-priced market. The airline claimed that both proposed offered by IAG undervalue Norwegian and its prospects.

IAG had last month bought a 4.6% stake in Norwegian with a view to starting takeover discussions but it said on Friday that it had been unable to reach agreement and was "currently considering its options" over the airline.

On Thursday, IAG's majority shareholder Middle East carrier Qatar Airways said it would be supportive of a deal.

In a statement IAG said: 'IAG confirms that it has had contact with the Norwegian board regarding a possible offer, without reaching an agreement. The airline has recently made moves the discount flights arena which has forced larger competitors to respond.

IAG's move for Norwegian 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-priced long-haul business.

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