Julian Moxon/PARIS
KLM is looking for a buyer or investment partner for its low-cost subsidiary Buzz following its failure to agree a take-over of British Airways' low fares operator Go.
The Dutch flag-carrier says Buzz, into which Go would have been merged if it had succeeded in its take-over, "is a little undersized for the European market" and must be developed or sold off.
BA is now understood to have entered into exclusive negotiations with UK venture capital firm 3i in its bid to sell Stansted-based Go, after failing to agree terms with KLM - which itself claims it "decided not to put in a final offer".
"We were definitely interested," it says. "The synergies were obvious and the combination would have made a real potential player in the low-cost market to compete with Ryanair and EasyJet.
"It could have been of real value to our shareholders, but in the end we could not agree with BA's position."
KLM is now examining the future of its low-cost operation with a view to bolstering it by bringing in a financial or airline partner, although it says a sell-off "is one of the alternatives". It adds: "We will now review our options, which are either to continue developing Buzz as a standalone airline or to consider selling off our entire low-cost operation. This is a very fast-changing sector."
Nevertheless, KLM says Buzz has developed a "substantial operating base in the UK low-cost market after little more than a year of operations", and has the advantage of holding valuable slots at its London Stansted base.
Amsterdam-based KLM's bid for Go was launched in conjunction with US private equity firm Carlyle group, which has extensive aviation and defence interests in the USA, although the carrier will not say whether or not the investment specialist figures in its plans for Buzz.
The vulnerability of the Buzz position was emphasised earlier this year when, during subsequently failed merger talks, BA and KLM made it clear that the Dutch-owned low-cost operator, rather than Go, would be sacrificed as part of the price for European Commission approval.
Source: Flight International
