Published: Mon, August 06, 2018
Business | By Eloise Houston

IAG threat to sell Norwegian shares

IAG threat to sell Norwegian shares

IAG shares fell on Friday after the British Airways owner's quarterly profit missed forecasts and it reported a weaker than expected performance on trans-Atlantic travel compared to peers.

Aer Lingus made a profit of €104 million in the first six months of the year - nearly double the amount earned in the same period of 2017.

The airline group, which owns Aer Lingus, Vueling and Iberia, said strikes were causing disruption for customers and hurting the Spanish economy.

The long-haul fleet will grow to seven A330-200 aircraft in Paris and Barcelona next year.

In late morning trading, IAG shares on the FTSE 100 index were down 2.7% at 666.4p. "Simply put, expectations were higher". "Also, we launched LEVEL short haul operations from Vienna where it will have four A321 aircraft that will operate to 14 European destinations".

The owner of British Airways has said that it remains interested in acquiring Norwegian, but will sell its shares in its low-priced rival if no deal can be agreed.

He said investor focus was also on the cost base. With IAG at the mercy of the ups and downs of the oil price, the most important metric is what IAG has rather clunkily named non-fuel operating costs. These are the ones IAG can control.

Any deal for Norwegian would supplement IAG's own growing low-priced, long-haul brand Level, which it has grown since launch last June.

"There's some good news on this front, with costs falling at a faster rate than we've seen recently. We continue to look at Norwegian and we continue to have some interest in it", he said. "The financial performance of the company is poor, and the balance sheet is very stressed".

Walsh said earlier on Friday that he was still interested in Norwegian but there were now no active discussions.

In April, IAG acquired a 4.6 per cent stake in Norwegian with a view to starting takeover discussions but in May Norwegian said it had rebuffed two approaches from IAG.

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