COLIN BAKER LONDON
Corporate financiers in London believe that British Airways may struggle to reach even the £100 million-mark ($145 million) as it attempts to sell Go.
BA says it never expected to achieve the £300-£400 million mentioned in press reports, anticipating about half this sum for low-cost Go. However, one European airline chief is understood to have said that BA will have to lower its price if it wants a swift sale. BA's financial year ends on 31 March, although the carrier is unwilling to tie itself to a timetable.
Of the six short-listed candidates for Go, Iberia is understood to have pulled out already. One board member notes that although BA wants greatest value for its shareholders, that does not necessarily mean achieving the highest sale price. The implication is that it would avoid opening the way for a major new competitor at Stansted. Therefore a deal with a low-fares rival, such as easyJet, is unlikely. easyJet insiders say that, contrary to press reports, they are unlikely to bid anyway.
One corporate financier warns, however: "Yes, it's difficult to sell to a competitor, but it's more difficult to close down an airline". He adds "BA is facing a very tricky situation. There is no obvious buyer." If KLM is not seen as a threat by BA, and is serious about its low-fare plans, it may be a possibility.
Venture capitalists 3i, Barclays Private Equity, Electra Partners and Texas Pacific Group are reported to be interested in Go. Barbara Cassani and her management team are understood to be talking to all the potential financial investor groups and have not committed to any particular bid. The lease deals for the carrier's fleet of Boeing 737s are seen as a problem, with BA likely to have favourable lease arrangements, which may not be available to a new owner.
BA is understood to be re-building bridges with its oneworld alliance partners following the ruptures caused by its failed merger bid with KLM. In particular, BA is aiming for closer links with American Airlines and Iberia. With this in mind, BA chief executive Rod Eddington met American chairman Donald Carty in Dallas in mid-January to discuss how to develop their pact.Source: Airline Business
