Dan-Air swallowed up by BA: Rivals say competition and choice will be cut by takeover that will axe 1,900 jobs
Lord King, BA's chairman, said he did not expect any objections from competition authorities in London and Brussels because the alternative would be for Dan-Air, which was founded in 1953, to be placed in receivership.
The indications are that the takeover will get the backing of the Office of Fair Trading and ministers, even though the number of jobs saved at Gatwick is not as high as had been expected. Of Dan- Air's 2,000 full-time staff and 300 temporary employees only 400 are being offered jobs with BA - on lower pay and reduced terms and conditions. There are fears that a further 600 jobs could go at FLS, the company that services Dan- Air's aircraft fleet.
John Major and John MacGregor, Secretary of State for Transport, are said to have been anxious not to see Dan-Air collapse, because of the effect on Gatwick. But the Government may face a fresh political row with Brussels if, as expected, the EC competition directorate takes a tough line.
Under the agreement, Dan-Air's charter operations will cease, all but 12 of its fleet of 38 aircraft will be sold and its European scheduled route network will be cut from 28 destinations to 12. Among the routes saved are those between Gatwick and Aberdeen, Athens, Brussels, Madrid, Manchester, Montpellier, Paris, Rome, Toulouse, Vienna and Zurich, and that between Heathrow and Inverness. Operations will continue under British Airways' name.
That will make BA the biggest operator at Gatwick, with services to 45 European cities and the largest share of the precious take-off and landing slots.
BA will take on pounds 35m of Dan-Air's liabilities, estimated at pounds 115m, enabling it to repay bankers, trade creditors and aircraft suppliers. But shareholders in Dan-Air's parent company, Davies and Newman, who funded a pounds 50m rescue package a year ago, will receive nothing.
Asked if BA would pull out rather than make concessions on routes and slots, Lord King said: 'I don't think that is going to arise. Dan-Air, which lost pounds 26m in the first half of this year, would have gone under and all its staff would have lost their jobs had BA not come to the rescue.'
But Richard Branson, chairman of Virgin Atlantic, said the takeover would destroy more jobs than it would preserve in the long term. Virgin was being denied access to Heathrow and Gatwick by BA's increasing domination. If Virgin could get the slots it wanted to expand its long-haul routes and start European scheduled services then up to 1,500 jobs could be created.
Mr Branson, whose rescue talks with Dan-Air collapsed this month, said that to 'redress the balance' he was launching Virgin European Airways and had applied for licences to fly to Paris and Brussels from both Heathrow and Gatwick.
BA insisted that it would walk away from the takeover if it was subjected to lengthy examination by the competition authorities or made contingent upon BA surrendering routes.
But Sir Michael Bishop, chairman of British Midland, said: 'It is quite possible that the EC will require significant concessions from BA for the deal to go through. This could involve the substitution of BA by other British airlines on major routes at both London airports.'
Sir Michael added: 'It is clear from subsequent events that totally inadequate safeguards for other British airlines were adopted by the Government both when BA was privatised and when it later acquired British Caledonian.'
Mr Branson said it was time for a complete review of competition at Heathrow and Gatwick by the Civil Aviation Authority.
Britannia Airways, the UK's biggest holiday airline, said it was raising the BA deal with the Office of Fair Trading on competition grounds.
BA said the agreement was likely to be completed in the next few weeks. In the meantime Dan-Air flights would continue to operate from Gatwick.
David James, the 'company doctor' brought in to rescue Dan-Air two years ago, said he did not feel he had failed. A significant number of jobs would be saved, severance terms would be better, there would be no disruption to scheduled services or uncertainty for passengers and trade creditors owed pounds 43m would be paid in full.
Image fatigue, page 15
- 1 Autistic adults could take pure MDMA to 'reduce social anxiety'
- 2 Before you complain about your GP, this is what you need to know about actually doing the job
- 3 Father of 12 accused of raping, beating, starving and abusing his own children in US 'cult'
- 4 Britain's Got Talent 2015: Jamie Raven divides Twitter as fans expose mind-boggling magic trick
- 5 Charlie Charlie Challenge explained: not a Mexican demon being summoned — it's gravity
People are criticising Fifa World Cup sponsors with corrupt corporate logos
Natalie Portman tells Harvard graduates: 'Accept your lack of knowledge'
British tourists complain impoverished boat migrants are making holidays 'awkward' in Kos
Fifa corruption live: Sebb Blatter warns 'more bad news may follow' as he clings to power
Skull found in Spain could be the world's first-ever murder victim
EU referendum: David Cameron's rules are a 'democratic disgrace', says French-born Scottish politician set to be denied a vote
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
Australian man punched in the face for defending Muslim women from abuse on train
A nation of inequality: How the UK is failing to feed its most vulnerable people
David Starkey 'tells Amal Clooney to shut up and stop over-promoting human rights'
EU referendum: David Cameron to deny EU migrants and under-18s the chance to vote
Negotiable: Recruitment Genius: One of the South East's fastest growing full s...
£35-40k (DOE) + Benefits: Guru Careers: We are seeking a Marketing Communicati...
£30000 - £32000 per annum: Recruitment Genius: Estimating, preparation of tech...
£14000 - £17000 per annum: Recruitment Genius: You will work as part of a smal...