Norwegian rebuffs offers from British Airways parent IAG

* IAG says could not agree with Norwegian on possible offer

* CEO says mulling options over Norwegian

* IAG Q1 profit jumps 75 pct

* IAG shares up 5 pct; Norwegian shares down 10 pct (Recasts with new CEO comments, adds analyst comment)

By Sarah Young and Victoria Bryan

LONDON, May 4 (Reuters) - British Airways-owner IAG is considering its options after Norwegian Air Shuttle (LSE: 0FGH.L - news) rebuffed two takeover advances, IAG said on Friday, warning some airlines will struggle to survive as fuel prices rise.

IAG, which confirmed its position as one of Europe's strongest airline groups with a 75 percent jump in quarterly profit, said it had held talks but could not reach an agreement with low-cost carrier Norwegian on a deal.

Norwegian, which has shaken up long-haul rivals by offering cut-price transatlantic fares, said in response it had received two conditional proposals for a full takeover from IAG, but had rejected them because they undervalued the company.

IAG appeared happy to wait before making its next move.

"We'll have a look at all of our options in relation to Norwegian," chief executive Willie Walsh, a seasoned dealmaker, told analysts on a call.

He said that, in general in Europe, he expected to see weak carriers being especially hurt by rising fuel prices. "I wouldn't be surprised to see a few of these weaker carriers slip further into difficulties and potentially see some exits from the market in the latter part of this year."

Walsh was downbeat on Norwegian's future. When asked by an analyst whether loss-making Norwegian could execute its current growth programme as a standalone business, he said: "no".

IAG bought a 4.6 percent stake in Norwegian in April with a view to starting takeover discussions. Norwegian said in late April that a number of groups had made advances since IAG bought its stake.

IAG's moves came after Norwegian had to issue new shares in March to try to shore up its balance sheet and help it weather higher costs and deepening losses as it gambles on a huge expansion of its low-cost long-haul business.

Shares (Berlin: DI6.BE - news) in Norwegian fell 12 percent on Friday following the news it had rejected IAG's proposals. IAG shares rose 5 percent.

"It is likely that it (IAG) refused to offer a huge premium – the defiant rejection by Norwegian suggests the intersection between what a rational IAG will pay for a heavily loss-making airline, and what the Norwegian board considers acceptable, is very small, or likely non-existent," said Bernstein analyst Daniel Roeska.

FUEL PRICE RISE COMING

But even IAG is not immune to the impact of the recent rise in oil prices to 3-1/2 year highs.

"With (Other OTC: WWTH - news) the higher fuel price we would expect some people to trim back fourth quarter capacity and we'll be looking to do the same," Walsh said.

The jump in IAG's quarterly profit was boosted by favourable currency moves, plus higher ticket prices and better sales, helped by strong demand on its lucrative transatlantic routes, and after its costs excluding fuel fell.

The improved earnings and reduced costs at IAG contrast with rival Air France-KLM (LSE: 0LN7.L - news) , which on Friday reined in profit and growth expectations for this year due to an ongoing series of costly strikes at its main Air France (Paris: FR0000031122 - news) brand.

Air France-KLM shares slumped 7 percent.

IAG posted operating profit before exceptional items of 280 million euros ($335 million) for the first three months of 2018, beating analysts' consensus forecast of 206 million euros.

($1 = 0.8349 euros)

(Reporting by Sarah Young; Editing by Adrian Croft and Mark Potter)