May 8, 2018 / 3:51 PM / 2 months ago

Norwegian Air says takeover interest validates business model

OSLO (Reuters) - Budget carrier Norwegian Air (NWC.OL) remains confident of its business model, its CEO told shareholders on Tuesday, less than a week after the company said it had rejected two takeover proposals from British Airways owner IAG ICAG.OL.

FILE PHOTO: Bjorn Kjos, CEO of Norwegian Air, at the launch of the airline's first low-cost transatlantic flight service from Argentina at Ezeiza airport in Buenos Aires, Argentina, March 8, 2018. REUTERS/Marcos Brindicci/File Photo

London-listed IAG last month took a 4.6 percent stake in the airline, which in turn triggered interest from other suitors, according to earlier statements from Norwegian’s board.

“Acquisition interest from several parties confirms the sustainability of the business model,” Chief Executive Bjoern Kjos told the company’s annual 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 an 84 percent between 2017 and 2020 to 56.9 billion Norwegian crowns (5.2 billion pounds), according to I/B/E/S forecasts on Thomson Reuters Eikon.

While the company is expected to post a net loss of 650 million crowns in the current year, the analysts forecast a profit of 723 million crowns in 2019 and 1.2 billion crowns the following year.

Reporting by Terje Solsvik; Editing by Adrian Croft and David Goodman

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