Go prepares to expand into Europe

British Airways' low-cost offspring has truly flown the nest, while a German pay agreement gives hope to British pilots

Low-cost airline Go is planning to develop a new European hub to serve as a base for its wider ambitions and to link up the different parts of the network.

News of the move follows confirmation this week that Go has finally concluded the much-touted management buy-out from British Airways in a £110m deal backed by venture capital group 3i.

Go chief executive Barbara Cassani said the company was currently "in discussions with airports all over Europe" about identifying possible sites for the hub operation, and had so far had talks with about "seven or eight" different players.

"We want to add new bases of operations... we are looking to add another base of operations in Europe ­ that's definitely on the cards," said Ms Cassani.

"We love having lots of conversations with all the airport operators, they all talk to each other," added the Go boss.

Ms Cassani stressed that discussions were in the preliminary stages and declined to give a firm timescale for when a final deal might be signed. But she said: "In the next seven to eight months we need to firm up where we go next year."

The new site is expected to operate a mixture of short and long-haul flights to both holiday and business destinations.

However, while budget operators have successfully established hub operations in the UK, Go is likely to find it more difficult to strike deals with European airports, many of which are controlled by large national airlines.

Go has an established hub at London Stanstead from which it runs services to 20 destinations. Last month it also opened a new hub operation from Bristol, offering flights to eight destinations, a figure it shortly expects to grow to around 11, with plans to fly over half a million passengers from the new base in the first year. Go also has smaller scale operations in Glasgow and Edinburgh.

The low cost airline is bidding to grow total passenger numbers from 2.8m last year to "closer to 4 million" for the coming year. The company has already expanded its fleet from 13 to 15 aircraft this year and hopes to grow this to 17 planes over the coming year.

Go said that there are "no plans" to make acquisitions stressing that any expansion would be an organic process. "The challenge is to grow quickly but maintain a strong level of operational integrity," said Ms Cassani.

Ms Cassani and 3i are aiming to float Go sometime in "the next couple of years", following in the footsteps of rival easyJet which floated last November and was valued at the time at around £850m.

Under the MBO deal announced this week Ms Cassani retains a 4 per cent stake in the airline with an additional 18.5 per cent holding split between Go's 750 staff. Ms Cassani has run Go since it launched three years ago after joining former parent BA in 1987.