Cassini 'ecstatic' as Go lands £110m MBO

Click to follow
The Independent Online

Barbara Cassani, the chief executive of Go, was £5m richer last night after British Airways finally sold the low-cost airline for £110m to a management buyout team backed by the venture capital group 3i.

Ms Cassani, who has been at the helm since the launch of Go three years ago, will retain a 4 per cent stake in the airline while a further 18.5 per cent will be spread among the airline's 750 staff. The bulk of that 18.5 per cent will be shared among a group of 19 senior managers who have paid for their shares in a combination of cash and "sweated equity". All other employees and new members of staff will receive options free.

Ms Cassani said she was "ecstatic" that the deal has finally been completed and said the aim of 3i and the management was to float the airline in the next two years. "People look at a company like easyJet which has floated and now has a market value of £1bn and think why shouldn't that be us," she said.

BA, which invested an initial £25m in Go, will receive £80m in cash on completion of the deal and £20m in loan notes. It will receive a further £10m provided Go is sold by 3i within five years.

Rod Eddington, BA's chief executive, said the deal represented an "excellent" return on its initial investment three years ago. BA decided last year to exit the "no-frills" airline market, which is dominated by Go, Ryanair and easyJet, as part of its strategy to focus on business class passengers and reduce lower-priced seats. It entered exclusive talks over the sale of Go with 3i in March.

The Stansted-based airline carried 2.8 million passengers last year and made a profit of £4m compared with a loss of £20m in 1999-2000.

This year it expects to carry 4 million passengers on its network of 30 routes, including 600,000-700,000 from its newly opened hub at Bristol. Go is also increasing domestic flights from Glasgow and Edinburgh to cities such as Belfast and Bristol.

For 3i, the deal marks a further move into the financing of larger management buyouts. In the last 18 months it has backed buyouts at Fairview Homes, Allied Textiles and Peter Black.

It beat off competition from KLM, backed by the Carlyle group, Electra and Barclays Private Capital to finance the Go deal.