Norwegian Air could be sold to IAG or another bidder if the price is right, but offers made so far have been too low, according to the budget carrier’s top office holders.
Norwegian last week said it had rejected two takeover proposals from Aer Lingus-owner IAG.
“At the right price, anything is for sale,” founder and chief executive Bjorn Kjos said at Norwegian’s annual shareholders’ meeting.
Chairman Bjorn Kise said the bids indicated by IAG were too low to be recommended to shareholders.
Norwegian remains confident of its business model, Mr Kjos told shareholders.
IAG, which owns British Airways, Iberia, and Vueling, in addition to Aer Lingus, last month took a 4.6% stake in the airline.
“Acquisition interest from several parties confirms the sustainability of the business model,” said Mr Kjos told the shareholder meeting.
Loss-making Norwegian is in the midst of a massive transatlantic expansion aimed at turning around the company’s fortunes by replicating the low-cost model that worked for European flights.
Analysts on average expect the airline’s revenue to grow by 84% between 2017 and 2020 to £5.2bn (€5.93bn), according to forecasts on Thomson Reuters Eikon.
While the company is expected to post a net loss of €67m in the current year, the analysts forecast a profit of €74.7m in 2019 and €124m the following year.
Norwegian recently scrapped its winter route from Cork and Shannon to Providence in Rhode Island but has shaken up rivals on the transatlantic, as well as poaching pilots from Ryanair in recent times.
However, the viability of its business model has been called into question by other analysts because of mounting costs.
IAG boss Willie Walsh told analysts his firm would “look at all of our options in relation to Norwegian” following the rebuffed bid, but said Norwegian could not continue its current growth programme as a standalone business.
Potential IAG plans to gobble up Norwegian is bad news for Ireland’s consumers less than three years after the Government sold its 25% stake in the Irish airline, the Consumers’ Association of Ireland said recently.
Dermott Jewell said it is the first clear example of the way the takeovers in huge industries like the airlines will lower competition while consumers are left on the sidelines as “powerless” observers because transatlantic fares will inevitably rise.
Reuters and Irish Examiner