EasyJet, the budget airline, has agreed to pay £103.5m in cash to buy GB Airways from the privately held Bland Group. The deal means that easyJet will operate 24 per cent of the landing slots at Gatwick airport and make it the airport's largest carrier.
GB Airways operates as a franchise of British Airways, a deal that ends in March next year, although the easyJet acquisition is expected to finalise in January. British Airways plans to begin its own services to compete with GB Airways, which flies mainly to southern Europe and North Africa.
GB Airways operates a fleet of 15 Airbus aircraft across 39 routes. The deal includes all of its 28 Gatwick routes and six out of Manchester airport, but not its five landing slots at Heathrow. In its report and accounts for 2006, GB Airways reported revenues of £250m and a pre-tax profit of £2.6m. It carried 2.8 million passengers and had net assets of £33m.
EasyJet's chief executive, Andy Harrison, said that he expects the acquisition to be fully consolidated into easyJet's current business by next winter, and that cost savings generated by the deal are likely to involve some job losses, although not in aircraft crew.
He said: "This is an acquisition which both strengthens our customer offering at London Gatwick, our biggest base with an attractive catchment area, and allows us to fully capitalise on the potential of the airport through a larger number of slots... we expect to achieve both cost and revenue synergies as we expand our business at Gatwick."
Investors reacted positively to the deal. By the close of trading, easyJet was one of the biggest risers in the FTSE 250, closing 39.5p better at 622p.
Meanwhile, British Airways was also in the black, closing 10p higher at 433.5p as the blue-chip market staged a sharp rally.
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