It is concerning when a newborn is losing weight, especially a newborn that is small to begin with!
As other posters have mentioned, some weight loss is common. The longer the mom was on IV fluids, the greater baby's weight loss. There have been many recent studies on this. Don't forget to include that information when you're evaluating newborn weight loss.
Rule #1 (ALWAYS!) is feed the baby. Of course, you want to be certain that the baby gets all the necessary nutrition. That said, formula really should be given only when it is medically indicated and not as a first resort. What else could be done to assure that this baby doesn't continue to lose weight?
The first thing I would suggest is to assess a feeding. Was baby latched on well? Was mom comfortable? Was baby getting milk? Was baby wetting diapers and stooling? What color was the stool?
What about skin to skin contact? Was mom holding baby in kangaroo care as much as possible? Not only would this help her baby be encouraged to nurse more frequently, it would keep baby warm and calm (important to reduce weight loss), and help mom's milk production.
What about other things like limiting visitors (read: distractions that often lead to missed feeding cues and baby "shutting down")?
You could also recommend hand expressing after feedings and "topping off" with colostrum which helps to 1) assist the baby in getting more milk (energy) for his efforts and 2) helping mom improve her milk production (short and long term).
Babies that are low birth weight usually have thin buccal pads which makes breastfeeding a bit more challenging at first. Nursing frequently, topping off with colostrum hand expressed after nursing, and even a little structural support from mom can help.
Here's an evidence-based resource regarding when/how to supplement the breastfed baby in the hospital http://www.bfmed.org/Media/Files/Pro...ementation.pdf