EasyJet to buy GB Airways

EasyJet has agreed to buy the entire share capital of GB Airways, excluding its slots at Heathrow Airport.

GB Airways’ owners, the Bland Group Limited, has sold the primarily Gatwick-based airline for a cash consideration of £103.5 million.

As a result, the franchise agreement between British Airways and GB Airways will come to an end from March 2008.

BA said it intends to start services on some of the routes operated under the franchise, from Heathrow to Faro and Malaga and from Gatwick to Faro, Gibraltar, Ibiza, Malaga, Palma and Tunis, from March 30.

The airline will also end its franchise with Loganair from October 25, 2008 and begin a codeshare arrangement with the Scottish carrier.

BA chief executive Willie Walsh, said: “UK franchises have outlived their purpose. easyJet has made an offer to buy GB Airways and this has enabled us to end the franchise agreement early. We had an option to buy GB Airways but we rejected it.

“We have a significant base at Gatwick and our focus will be on maintaining and developing it as an integral part of our business.”

GB Airways will continue to operate as a BA franchise partner on their existing network to destinations in Europe and North Africa until March 29. Loganair will continue to operate as a franchise partner on Scottish routes until October 25.

The deal between GB Airways and easyJet is expected to be completed within eight weeks.

The airlines said during this period flights will operate as normal and on completion, passengers can choose to be rebooked on easyJet or will be entitled to a full refund.

GB Airways operates 39 routes – 28 from Gatwick, six from Manchester, five from Heathrow – and operates 15 Airbus aircraft (nine A320s and six A321s).

Easyjet said the purchase gives it valuable take-off and landing slots at Gatwick and the opportunity to accelerate route development.

Following the acquisition, easyJet will operate 24% of Gatwick’s slots and will fly around 8 million passengers across 62 routes from Gatwick.

EasyJet chief executive Andy Harrison said: “This is an acquisition which both strengthens our customer offering at London Gatwick, our biggest base with an attractive catchment area, and allows us to fully capitalise on the potential of the airport through a larger number of slots.

“The deal will bring major benefits to both easyJet and GB Airways customers, delivering a wider choice of destinations at easyJet’s great prices, and creating clear value for our shareholders.”

GB Airways chief executive Kevin Hatton said: “The sale agreement brings to an end a period of uncertainty about the future direction of our company.

“We are pleased that the business and customer base built up by GB Airways will now be secured and strengthened under the ownership of the UK’s largest airline by passenger numbers, and one of the industry’s most powerful brands.

“We will fulfil our outstanding obligation as a franchise partner to BA and then look forward to a smooth operational merger with easyJet.”

GB Airways’ Heathrow slots will be exchanged under three separate agreements, the consideration for which will be passed on to the Bland Group (net of costs) on receipt.

By Bev Fearis