EasyJet: what goes up usually comes down

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Hell hath no fury like a woman scorned, and that's certainly true of Barbara Cassani, the chief executive of low-cost airline Go.

She hasn't had a good week. Ever since a bid for her company by larger rival easyJet was leaked nine days ago, Ms Cassani has been engaged in a public battle with the predators.

The main shareholders of Go, venture capital firms 3i and Barclays Private Equity, want to cash in on their investment and sell to easyJet.

But Ms Cassani wanted to float the company herself. EasyJet's plans to scrap the Go brand and fully integrate the airline must have stung the ambitious winner of the Veuve Clicquot Business-woman of the Year award.

Denying a claim by Ray Webster, easyJet's chief executive, that he had offered her a job, Cassani hit back in an extraordinary statement, in which she claimed she "does not want to be part of the combined business in any capacity". Her fellow board members backed her, she added: "Go's management team is 100 per cent behind Barbara Cassani."

This prompted the founder and chairman of easyJet, Stelios Haji-Ioannou, to accuse her of allowing "emotions and ego to cloud her judgement". Perhaps she is a little touchy. After all, if the sale goes through, she could collect as much as £18m from her shares.

Almost as a side issue to the public feuding, easyJet has seen its love affair with City investors start to cool, as they fret over the question of whether the airline is paying too much for Go and expanding too fast. The company's share price had risen rapidly in the months following 11 September as it became clear that, while traditional airlines had seen a slump in passenger numbers, the no-frills carriers were entering a boom period.

Now Mr Haji-Ioannou has learnt that what goes up usually comes down. EasyJet's shares fell 19 per cent last week to end at 425p, back to the level they were before 11 September. Gloomy traffic figures from airport company BAA didn't help the mood of investors.

Not content with pursuing one of its main rivals, easyJet is also buying BA's German subsidiary, Deutsche BA, for up to £40m. Wits have said that as it has already cut "frills" like free drinks and papers, there can't be many costs left to cut.

EasyJet is putting its faith in its management formula. It gets its planes in and out of airports quicker; it doesn't use travel agents; and its pilots work longer hours. But it will have to fight with the German pilots' unions – a force to be reckoned with. In fact, acquiring companies is likely to prove anything but easy for easyJet.