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The BBC's business reporter Brian Milligan
"It first looked as if it would be difficult for BA to find a buyer"
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Thursday, 14 June, 2001, 16:28 GMT 17:28 UK
BA sells Go for 100m
Go jet in-flight
BA's low cost carrier Go ends up in private hands
British Airways has announced that it will sell its discount airline Go to the private equity firm 3i in a management buyout for 100m.

The British airline will receive a further 10m if 3i sells Go to someone else within five years.

The price tag is roughly in line with most analysts' expectations.

BA said that it was making an "excellent" return on its initial investment of 25m in Go three years ago.

Barbara Cassani, chief executive of Go, said: "I am delighted that the people who have made Go such a success will now co-own the airline."

A new strategy

Last year BA decided to sell Go as part of a strategy to restore profits at its loss-making European operations.

"Go is an excellent airline with a fine management and workforce," said Rod Eddington, the chief executive of BA.

"As a no-frills operator, however, it simply does not fit in our full-service strategy."

The budget airline market - dominated by Go, Ryanair and Easyjet - does not suit BA's plans to reduce lower-priced seats on many of its routes and instead focus on business class passengers.

Exclusive talks

BA entered into exclusive talks with 3i over the sale of Go back in March.

At the same time, Dutch carrier KLM, which had shown some interest in the sale, said it would not make a bid.

Ms Cassani said then that she expected to remain in charge of the no-frills carrier after the sale.

In a company statement on Thursday, Ms Cassani said: "Over three years we have built a strong business with low prices and great service."

Mr Eddington added: "I am sure that Barbara Cassani and her team will continue to grow this exciting business into the future."

Back to profitability

BA returned to profitability at the end of last year when it reported pre-tax profits of 65m for the last quarter - compared to a 60m loss for the same period a year before.

Shares in BA closed down almost 5.5% at 332p on Thursday, prior to the announcement of the sale.

The stock has fallen by about 9% since early June, after BA played down renewed speculation of a merger with KLM.

Shares were also hit after BA reported lower traffic numbers in May owing to the weaker US economy and the impact of foot-and-mouth disease on tourist visits to Britain.

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