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Last Updated:  Tuesday, 18 March, 2003, 17:25 GMT
Easyjet drops BA's German arm
Deutsche BA plane
Deutsche BA said flights will continue as usual
The budget airline Easyjet has scrapped plans to buy Deutsche BA, a German offshoot of British Airways.

The carrier blamed the inflexibility of German labour laws and worsening conditions in the country's aviation market for its decision.

Easyjet announced in May last year that it had acquired an option to buy Deutsche BA, but speculation had risen in recent weeks that it was unlikely to go through with the deal.

British Airways said Easyjet's decision was "disappointing" but that it was "business as usual" for Deutsche BA's customers and staff.

"We have no plans to close the airline and will continue to develop it as a no-frills carrier," said Deutsche BA chairman Roger Maynard.

'Insurmountable hurdles'

Easyjet had been paying 600,000 euros (406,000) a month for the option to buy Deutsche BA, which runs 130 flights a day and employs 800 people.

But Easyjet chief executive Ray Webster said the carrier had come up against two "insurmountable hurdles".

"Firstly, the rigidity of German labour laws has made it impossible to get acceptance of Easyjet conditions of employment from key staff groups.

"Secondly, since we negotiated the option there has been a substantial deterioration in the financial performance of all airlines in the German market including DBA.

"This is in large part due to the specific characteristics of the German market and in particular the highly aggressive pricing policies of Lufthansa."

The increasingly competitive nature of the German aviation market had led some analysts to oppose the deal.

Easyjet shares jumped 14% to close at 229p.

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