Saturday , April 20 2019

Norwegian Air CEO Kjos rejects British Airways owner’s advance


Norwegian Air Shuttle ASA CEO and co-founder Bjorn Kjos said the discount carrier being pursued by rival IAG SA isn’t for sale, reiterating a stance long held by the former fighter pilot who has a 27 percent stake.
“I haven’t thought about selling at all” even though many companies have shown interest in acquiring Norwegian Air, Kjos said. Having just returned from a trip, he said he hasn’t spoken with IAG since the British Airways owner said it had acquired a 4.6 percent holding and is considering making a full offer.
IAG’s move on Norwegian comes after the company took steps to shore up its stretched balance sheet in a bid to pursue expansion into low-cost intercontinental flights. The push abroad has shaken up competition in Europe and also helped bring the Nordic airline its first annual loss since 2014 amid staff shortages and engine snags. Yet Kjos has said a sale “has not been on our agenda at all.”
An acquisition could value the company at about $3 billion including debt, people with knowledge of the matter have said, asking not to be identified because the deliberations are confidential. A deal with IAG would accelerate a rapidly consolidating European airline market. “I haven’t thought about anything with IAG,” Kjos said at the press conference, adding that its pursuit doesn’t come as a surprise. Norwegian has had visits of all airlines with money to spend and an interest in buying into the carrier, he said.
“The share price doesn’t reflect the underlying value and things we do in the company,” the CEO said. “Norwegian has fantastic potential. I think it has been too cheap.”
IAG has a number of options, according to Bernstein analyst Daniel Roeska. These include a full-scale acquisition, or increasing its stake to just under 30 percent without making an offer, and having a board seat to influence strategy.
IAG will need time to figure out how much debt Norwegian has, and how much it would have to acquire, he noted, estimating the level at about 6.8 billion.

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