Aer Lingus-owner IAG mulls Norwegian snub on approach
Airline group reports 75% jump in profit, well ahead of analyst projections
Aer Lingus-owner IAG posted operating profit before exceptional items of €280 million for the first three months of this year. Photograph: Cyril Byrne
Aer Lingus-owner IAG is considering its options after Norwegian Air Shuttle rebuffed two takeover advances, IAG said on Friday, warning that some airlines will struggle to survive as fuel prices rise.
IAG, which confirmed its position as one of Europe’s strongest airline groups on Friday 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 cut-price transatlantic fares from Ireland and elsewhere, 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.
Mr 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 replied “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.
Shares in Norwegian fell 12 per cent on Friday following the news it had rejected IAG’s proposals. IAG shares rose 5 per cent.
The jump in IAG’s quarterly profit was boosted by favourable currency moves, plus higher ticket prices and better sales, helped by strong demand on its lucrative transatlantic routes, and after its costs excluding fuel fell.
The improved earnings and reduced costs at IAG contrast with rival Air France-KLM, which on Friday reined in profit and growth expectations for this year due to an ongoing series of costly strikes at its main Air France brand.
Air France-KLM shares slumped 7 per cent.
IAG posted operating profit before exceptional items of €280 million for the first three months of 2018, beating analysts’ consensus forecast of €206 million. – Reuters