Who is in the running to make a bid for Go?

Analysis

Who is in the running to make a bid for Go?

British Airways is concentrating on the premium market and has decided to sell its low-cost subsidiary airline. John Lavabre reports on its potential buyers

When British Airways announced a £150m profit in the six months to September 30, chief executive Rod Eddington said: “We are taking a ruthless approach to poorly performing routes and assets.”

To prove the point, Eddington also announced BA’s decision to sell its low-cost subsidiary Go. This was prompted by the airline no longer suiting BA’s plans to concentrate on the premium end of the market.

Performance was not an issue as Go is expected to be in credit by next year and has increased turnover by 318% to £100.6 million.

BA admits a potential buyer has already come forward.”I can’t say who, how or when,” said a BA spokeswoman.

Asked how much the airline is worth, she said: “We’re not putting a figure on Go.”

One aviation analyst believes Go would make a safe investment and said a realistic sum would be around £300 million.

“Go is a good airline that should make a profit and be a fairly good investment. It will probably go to a big conglomerate or venture capitalists,” he said.

EasyJet, recently hit by landing charges at its Luton base, was quick to respond to BA’s decision with a statement appearing on its Web site as soon as the sale was announced.

“We applaud Rod Eddington’s decision to eliminate further cross-subsidies of Go and the rest of the British Airways European short-haul network. We also believe its Stansted base may offer an alternative solution to our on-going problems with landing charges at Luton airport.

“Therefore, we will take extreme care before making a decision to look at Go and would only do so at the right price,” the statement concluded.

Virgin Express has ruled itself out of the race, as has Lufthansa.

Ryanair sales and marketing director Tim Jeans made his airline’s position clear. “It’s not worth £300 million of our shareholders’ money. I’ll be interested to see if a venture capitalist is prepared to take a risk. We’ll watch with interest,” he said.

KLM also said it would “watch with interest.” BA franchise GB Airways ruled out any plans to bid for Go. A spokesman commented:”We are a major operator out of Gatwick and Heathrow, they fly from Stansted. We are not up for buying it.”

Will she won’t she?Cassani has been involved in Go from the start and may lead a management buyout of the airline

Cassani looks to the airline’s future

Go chief executive Barbara Cassani is thought to be considering leading a management buyout of the airline.

Go was formed under the direction of Cassani in 1998 with £25m backing from British Airways. It now employs 520 staff and flies to 24 destinations with its fleet of 13 Boeing 737 300 aircraft.

When the sale was announced, Cassani said: “We’re pleased with the decision announced today. Go is firmly established as a leading European low-cost operator and everyone at Go is looking forward to writing the next chapter of our success story.

“In a short time we’ve built a strong business with a great brand. We have been profitable this financial year and expect to exceed our target of breaking even at the end of our third year by making a profit. We have a strong base from which to grow.”

If nothing else, this shows Cassani is attached to the airline she has built.

A BA insider said he did not believe Cassani will leave Go for BA, her previous employer, but would not say whether he thought she will lead a buyout.