Norwegian Air Says IAG Sprung Takeover Bid to Hit Weakest Moment
(Bloomberg) -- British Airways parent IAG SA’s approach for Norwegian Air Shuttle ASA was opportunistically pitched to coincide with the discount carrier’s weakest period for earnings, according to Bjorn Kiese, its chairman.
“It wasn’t a coincidence that this came at this time,” Kiese said Tuesday at Norwegian’s annual shareholder meeting. “April, May is the weakest part of the cycle, also for the stock. Then it picks up in the summer and the third quarter.
Norwegian is also “a bit out of tune” in terms of fleet expansion, the creation of a leasing company and delays in strengthening its equity through a share sale, he said. The carrier is seeking to dispose of 140 planes or delivery slots after running up one of the biggest order backlogs in aviation history.
The first quarter, rather than the second, is often the weakest for carriers, with Norwegian’s loss widening to 1.89 billion kroner ($232 million) in the three months even after the boost of an early Easter. The airline’s passenger tally jumped 44 percent in April, though the figure lagged behind the increase in capacity, reducing overall occupancy levels.
Kiese stressed that his company, which is also struggling with a stretched balance sheet, hadn’t sought out bids. London-based IAG revealed last week it had presented two offers for Norwegian, with the discount carrier saying that its board rejected both on the basis that they undervalued its business.
“We haven’t put ourselves out for sale, others have approached us,” he said at the company’s headquarters in Fornebu, near Oslo. “IAG is not alone. But on the other hand we are at a stage where we’re planting the seeds. It’s a bit early to sell the harvest before its been cut.”
Bjorn Kjos, Norwegian’s chief executive officer, also reiterated that other potential suitors have come forward since IAG first announced that it had bought a stake in the company with a view to making an offer. Kiese added that some of those parties have proposed differing industrial approaches.
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