UK Airline EasyJet Bids for Rival

07 May 2002

British airline EasyJet is expected to announce this week the acquisition of its rival Go to form Europe’s biggest no-frills carrier.

Last week, EasyJet founder and outgoing chairman Stelios Haji-Ioannou revealed the firm had been in talks with 3i, the venture capital firm that controls 67.5% of Go following the management buy-out from British Airways last June.

Negotiations are expected to be completed Tuesday, with a possible announcement to coincide with EasyJet’s interim results on Wednesday. The acquisition – thought to be worth around £400 million ($586m; €641m) – will be funded by a share issue.

The merger is not music to the ears of Go chief executive Barbara Cassani, who told staff in a recorded message that she was opposed to the deal, but EasyJet’s offer had been too good for 3i to refuse.

However, news of the impending marraige caught the attention of Brussels-based carrier Virgin Express, which announced it wants to cooperate with the combined firm. The airline’s chairman David Hoare is due to meet with 3i this week.

“There are no competition concerns with these three airlines,” commented Will Whitehorn, right-hand man to Sir Richard Branson, the tycoon that controls Virgin Express. “There’s a lot of overlap between Virgin Express, EasyJet and Go. We won’t really know what to make of it until we sit down with them.”

Branson’s move may have been prompted by fiscal necessity, there having been a good deal of press speculation over the past week about the viability of much of the Virgin empire.

Data sourced from: Financial Times; BBC Online Business News (UK); additional content by WARC staff