Ryanair chief says BA should close no-frills airline Go and walk away

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The Independent Online

Michael O'Leary, the chief executive of Ryanair, the no-frills airline, yesterday said the forthcoming float of rival easyJet was vastly overpriced and added that British Airways' low-cost airline Go was "worth nothing".

Michael O'Leary, the chief executive of Ryanair, the no-frills airline, yesterday said the forthcoming float of rival easyJet was vastly overpriced and added that British Airways' low-cost airline Go was "worth nothing".

BA put Go up for sale this week with at an estimated price tag of £300m to £500m. Yesterday Go said it was on track to report its first annual profit for the current year.

Mr O'Leary, announcing a 45 per cent increase in interim pre-tax profits, said: "Getting rid of Go is the first sensible thing BA has done in the last four years. But it's not particularly saleable, and you can forget anyone paying £300m for it.

"BA's best strategy would be to close it down and walk away. That's because BA's problem is that Go competes with it. Anyone paying a lot of money for it will lose a lot of money. If BA gets anything for it, it will be a miracle."

Mr O'Leary's views will not surprise to his rivals, but it is unusual for a chief executive publicly to attack rivals so comprehensively. He said he thought Go might fetch £25m to £30m, and he did not believe it would be profitable for the full year. "The period they are talking about being profitable is the peak travel time. Over those months, if my granny had set up an airline, it would have been profitable. A company losing £25m a year is worth nothing."

Ryanair's results for the six months to 30 September showed a 33 per cent rise in passengers carried to 3.9 million and pre-tax profits of £78.9m, helped by sterling's strength and an sharp increase in internet bookings.

Go yesterday unveiled a net loss before tax of £21.8m for the year to 31 March. Trading in the first six months of the current year was profitable, with sales up 75 per cent in the period to £89m. The group said 65 per cent of sales are being made online.

Barbara Cassani, Go's chief executive, said she was determined to stay as head of the business after it was sold. "The kind of buyer I would like best is one that wants me to be CEO... and would consider enlarging ownership of the company to me, my management and beyond [to its 520 employees]."

Asked whether she was considering a management buyout, she said: "I'm neither ruling it in or out. I am not actively working on an MBO. But if one of the financial investors who have approached BA wanted to invite management participation, I would be very interested in working with them to do that."

On easyJet, Mr O'Leary said the flotation prospectus of his main rival was "riddled with contradictions", especially the view that fares would rise in future. He said he estimated the worth of the airline as £200m to £250m, compared with the £627m to £878m price range announced by easyJet last week.

EasyJet and Ryanair have very different strategies. While Ryanair aims to be the cheapest and flies to secondary airports, which are less costly, easyJet serves main airports from it base at Luton and simply aims to offer "good value".

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