Low-cost airline Norwegian rejects two takeover bids from IAG

Low-cost carrier Norwegian Air Shuttle (NAS) has rejected two takeover offers from British Airways owner International Airlines Group (IAG).

Norwegian's board unanimously rejected the "conditional proposals" on the basis that they "undervalued NAS and its prospects", it said in a statement.

The board "remains fully committed to delivering on its stated strategy", it added.

The news sent shares in the Oslo-listed company down 8%.

IAG said last month that it has acquired a 4.61% stake in Norwegian, which is "intended to establish a position from which to initiate discussions", including the possibility of a full offer for the firm.

But in an analyst presentation, IAG said it had so far failed to reach an agreement with the carrier.

"IAG confirms that it has had contact with the Norwegian board regarding a possible offer, without reaching an agreement.

"IAG is currently considering its options in relation to Norwegian."

The airline group reported a sharp increase in first quarter profit, helped in part by the timing of Easter.

It saw operating profit in the three months to March 31 rise 75% to 280 million euro (£247 million), traditionally the weakest quarter of the year for airlines.

Revenue grew 2.1% to five billion euro (£4.4 billion) as the group benefited from Easter falling within the reporting period.

IAG also said sales were boosted by service improvements, with a particularly strong showing in North America, Europe and Latin America.

Chief executive Willie Walsh said: "We're reporting another strong quarter performance with an operating profit of 280 million euros before exceptional items, up from 160 million euros last year.

"Our positive passenger unit revenue trend continued with an increase of 3.5% at constant currency.

"This trend benefited partially from the timing of Easter. Despite higher market prices, our fuel unit costs have gone up by just 0.6% in euros."

Profits were boosted by the stronger pound during the period, which bounced back against the dollar and the euro. It helped IAG book a net foreign exchange benefit of 58 million euro.

IAG expects operating profit for 2018 to show an improvement year-on-year. Its shares were up over 4% in London.

As well as British Airways, Irish carrier Aer Lingus and Iberia, IAG also owns Spanish low-cost airline Vueling and recently launched a budget long-haul operator dubbed Level.