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View Full Version : BA sold 'go' why now?


Freak
5th Feb 2004, 09:49
Evenin'-all

Now I don't have any figures to back this all up at the minute, but BA (representing the high-end of the market) ventured into the low-cost market a few years ago with 'go'. A good idea, most would say, what with the market being so cyclical, that way you can mop up customers from whichever sector is more popular at the time.

But it failed to turn in a profit quickly enough and was sold (bought out by the manager if I'm not mistaken), immediately made a profit and was bought by easyjet.

So why was it sold in the first place? Business decision, or share-holder appeasing? And with hindsight, would they do the same again?

Freak.

Anthony Carn
5th Feb 2004, 16:20
Could it, just possibly, be management incompetence? :rolleyes:

Take away their Heathrow slot majority and they'd have gone bust decades ago (once the taxpayer safety net had been removed).

I can think of another which would, at best, still be a grotty little joke without such a phenominal (no eggageration) advantage. Similar management "competence", y'see.

Wee Weasley Welshman
5th Feb 2004, 17:00
Bob Ayling was the champion and political defender of Go inside BA. When he went the nay-sayers were able to get Go sold off.

They wanted to do this because:

a) Pilots and cabin crew in BA viewed Go as stealing their work

b) This was going to get a lot worse quickly as Go expanded

c) The Pilot and cabin crew unions would have threatened industrial action on the issue

d) The City would think Cabin Crew Strike II and take fright

e) The share price would have taken a beating as a result

f) The board would have lost lots of bonuses and their options would have been devalued as a result of e)

g) The board wanted a comfy life and had no apetite to face down the unions despite the merits and assured success of Go

h) Lots of people wanted to buy it for more than they'd spent on it and a bit of short term profit looked agreeable

i) Many BA board members and directors live a somewhat charmed life and had no concept nor liking for running an airborne bus service

So they sold it. Despite Barbara making an unarguable case. They sold it to easyJet effectively. The company that is slowly but surely taking apart BAs European and Domestic network.

The BA unions will still see 'their' work being stolen but instead of the profits from this feeding into their bottom line - feeding their pension fund - it now goes to Stelios.

So really - it was all because the unions in BA wouldn't allow Go to flourish.


Cheers

WWW

lofty50
5th Feb 2004, 17:22
Does anyone really care? Apologies if this causes offence to anyone, but airlines like every business come and go. Like grocery stores, financial companies and so on.

Burns the Bread
5th Feb 2004, 18:00
Go was sold by BA when it was - because

a) Bob Ayling had just been sacked,

b) Rod Eddington didn't understand/like the lo-cost business model,

c) BA was in deep PooPoo financially (needed cash fast),

d) There was a huge amount of resentment / jealousy amongst BA staff (from the very top to the bottom) of Go's rapid and popular success.

It is generally agreed that Go was hugely undervalued on both the occasions it was sold - and this had everything to do with the "owners" (BA / 3i) incompetence - and their needing cash fast to support their balance sheet to appease other unconnected shareholders. But hey! - this is business folks......... gives you lots of faith in top management doesn't it. NOT!!:(

Stockpicker
5th Feb 2004, 18:08
My guess would be Go was sold when it became clear that the "BA as full-fare airline/Go as lo-cost airline" distinction was going to get more and more blurred as BA went more and more internet based and started offering some lo-cost fares on their shorthaul routes. Maybe it was just wishful thinking that BA could survive in old format without having to worry about a low-cost costbase to go with the new shorthaul fare structure that was emerging as FR/EZ and the like hit maturity.

Anthony Carn
5th Feb 2004, 18:36
I regard management incompetence and an inability to control workforce powers as one and the same thing. If, as stated previously, Go was disposed of to avoid problems with the workforce, then that's incompetence and I can well believe it.

----------------------------------------

Would have been worth the entire value of Go just to get rid of Ayling.

He brought new meaning to the phrase "An ailing company".

He moved on to the Millenium Dome project, did'nt he ? How appropriate. :rolleyes:

Freak
6th Feb 2004, 03:09
Hello lofty50:

I'm not asking because I have any emotional connection to 'go', or because I'm in favour of propping-up airlines that aren't turning in a profit, I am just interested to know more about the decisions surrounding it.

Those who ignore the past are destined to repeat it in the future and all that!

Freak.

lofty50
7th Feb 2004, 22:35
Hi Freak

You, me and all the "little" (no offence) people will never understand the machinations that go on in big companies boardrooms, and the reasons for so many insane decisions. I fear you will never get any satisfactory answer to your question other than what has already been said on this thread. Certainly you won't get answers from those responsible. Call me a cynic, but I gave up trying to understand things that I don't and never will understand long ago. (Women for example!)