GO NOW OWNED KY KLM?
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From today's Telegraph:
British Airways has received four bids for Go, the budget airline it put up for sale last year. The bids - submitted on Tuesday - are each believed to be worth less than £150m.
Dutch Airline KLM is understood to be leading the auction, ahead of bids from venture capitalists 3i, a joint venture between private equity firms Electra Partners and Barclays Private Equity, and an unnamed German tour company.
However, it is not known if BA's chief executive Rod Eddington would be happy to see Go acquired by a rival airline. KLM - which already owns the Buzz budget airline - could probably pay a higher price than a financial buyer, but a trade buyer might also mean greater competition for BA.
Go's chief executive, Barbara Cassani, is likely to work with either of the two financial bidders if their bids are successful. Barclays Private Equity and Electra initially made separate bids, but have since joined up in order to facilitate the additional investment that will be necessary to turn Go into a profitable business.
When BA first announced the sale, the market speculated that the company could be worth as much as £300m. However, price expectations have since fallen to below £150m.
British Airways has received four bids for Go, the budget airline it put up for sale last year. The bids - submitted on Tuesday - are each believed to be worth less than £150m.
Dutch Airline KLM is understood to be leading the auction, ahead of bids from venture capitalists 3i, a joint venture between private equity firms Electra Partners and Barclays Private Equity, and an unnamed German tour company.
However, it is not known if BA's chief executive Rod Eddington would be happy to see Go acquired by a rival airline. KLM - which already owns the Buzz budget airline - could probably pay a higher price than a financial buyer, but a trade buyer might also mean greater competition for BA.
Go's chief executive, Barbara Cassani, is likely to work with either of the two financial bidders if their bids are successful. Barclays Private Equity and Electra initially made separate bids, but have since joined up in order to facilitate the additional investment that will be necessary to turn Go into a profitable business.
When BA first announced the sale, the market speculated that the company could be worth as much as £300m. However, price expectations have since fallen to below £150m.
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If GO is being sold as a "GO"ing concern, surely it makes little difference who buys it? They are going to lose the budget passengers & Stansted locals anyway. Might as well take the highest offer (and some of their rivals cash) and just deal with the future competition. Refusing to sell to KLM could be seen as a decision made out of pride, not business sense.
The way to stop passenger losses would have been to fold the airline. But there is nothing to stop buzz / Ryan / Easy expanding and taking up the best routes that way either.
Only reason to choose another offer is if BA were convinced one set of bidders was markedly more incompetant and likely to mess the operation up so it folded on its own! BA gets the cash and GO dies on its own. Pretty unlikely though.
Anything obvious I have missed here?
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Just keep it Ginger!
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KLM may use private equity to bid for Go
By Kevin Done and Lina Saigol
Published: February 23 2001 20:33GMT | Last Updated: February 25 2001 18:29GMT
KLM, the Dutch flag carrier is considering mounting a joint bid with a private equity group to take over Go, the low cost airline subsidiary of British Airways.
BA, which is being advised by Goldman Sachs, is hoping this week to select its preferred bidder for exclusive negotiations with the aim of completing next month. Among the five short-listed bidders, the two private equity groups Electra Partners and Barclays Private Equity are understood to have teamed up and submitted a joint bid.
Electra had been approached by Candover, another private equity firm, but decided to mount the bid with Barclays.
Rival offers are understood to have come from 3i, the venture capital group, and from a European-based travel and leisure group. BA is hoping to secure a deal valuing Go at about £100m ($145m) but analysts suggest bids are more likely to be in the £70m to £90m range.
Among the private equity groups, 3i has been involved in the airline sector with its highly successful investment in 1991 in CityFlyer Express, which operated as a BA franchisee and was taken over by BA for £75m in late 1999.
Barclays Private Equity holds part of two Barclays funds' controlling stake in London Luton Airport Operations, which has the 30-year operating concession for Luton airport. The airport has been involved in a long-running dispute over landing charges with EasyJet, a rival to Go in the low-cost airline sector.
KLM has reached a strategic crossroads with its involvement in the fast- growing but highly competitive low-cost sector.
It started its own low-cost operation, Buzz, at the beginning of last year competing with Go and Ryanair at Stansted airport. It is understood KLM has concluded that Buzz, which is still lossmaking, is too small, however, to compete with bigger rivals.
It is considering increasing its involvement in the sector by taking over Go to combine it with its Buzz operation to achieve the necessary size.
The alternative is to follow BA's example by abandoning its low-cost experiment and trying to find a buyer for Buzz or another way of using its assets.
In contrast to BA's experience with Go, which ended up cannibalising part of BA's mainline traffic, KLM has avoided competing with itself through Buzz. The two brands have been kept further apart.
Copyright FT.COM
By Kevin Done and Lina Saigol
Published: February 23 2001 20:33GMT | Last Updated: February 25 2001 18:29GMT
KLM, the Dutch flag carrier is considering mounting a joint bid with a private equity group to take over Go, the low cost airline subsidiary of British Airways.
BA, which is being advised by Goldman Sachs, is hoping this week to select its preferred bidder for exclusive negotiations with the aim of completing next month. Among the five short-listed bidders, the two private equity groups Electra Partners and Barclays Private Equity are understood to have teamed up and submitted a joint bid.
Electra had been approached by Candover, another private equity firm, but decided to mount the bid with Barclays.
Rival offers are understood to have come from 3i, the venture capital group, and from a European-based travel and leisure group. BA is hoping to secure a deal valuing Go at about £100m ($145m) but analysts suggest bids are more likely to be in the £70m to £90m range.
Among the private equity groups, 3i has been involved in the airline sector with its highly successful investment in 1991 in CityFlyer Express, which operated as a BA franchisee and was taken over by BA for £75m in late 1999.
Barclays Private Equity holds part of two Barclays funds' controlling stake in London Luton Airport Operations, which has the 30-year operating concession for Luton airport. The airport has been involved in a long-running dispute over landing charges with EasyJet, a rival to Go in the low-cost airline sector.
KLM has reached a strategic crossroads with its involvement in the fast- growing but highly competitive low-cost sector.
It started its own low-cost operation, Buzz, at the beginning of last year competing with Go and Ryanair at Stansted airport. It is understood KLM has concluded that Buzz, which is still lossmaking, is too small, however, to compete with bigger rivals.
It is considering increasing its involvement in the sector by taking over Go to combine it with its Buzz operation to achieve the necessary size.
The alternative is to follow BA's example by abandoning its low-cost experiment and trying to find a buyer for Buzz or another way of using its assets.
In contrast to BA's experience with Go, which ended up cannibalising part of BA's mainline traffic, KLM has avoided competing with itself through Buzz. The two brands have been kept further apart.
Copyright FT.COM
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Heard the same rumour at the end of last week. Apparently, GO 737's to be absorbed in Buzz, and Buzz 146's revert to KLMuk.
Makes sense as a quick and easy way for Buzz to acheive their much desired and planned expansion.
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I'm flaring ! I'm flaring!
Makes sense as a quick and easy way for Buzz to acheive their much desired and planned expansion.
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I'm flaring ! I'm flaring!
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Heard this one too, although I am given to understand it will stay as GO as it now has a saleable image,and unlike Buzz is heading for a profit albeit small. the question would be things like pilot Seniority,Office,Ops and telesales, are they really needed as well or will KLMUK run the show and make the others redundant.
It ain't over until the Fat Lady Sings
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Never attribute to malice that which can be explained by stupidity.
It ain't over until the Fat Lady Sings
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Never attribute to malice that which can be explained by stupidity.
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Has anyone considered the prospect that if BA was to sell GO to KLM, it would then find itself in the position of owning the company again in a few years when the BA/KLM merger finally goes ahead. (might be a few years but is still a realistic possibility)
The flip-side of the argument is that the lease on the Buzz 146's is almost up and it would make sense for Buzz to acquire more cost effective a/c than the expensive 146's.
FH
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Speak your mind - It proves you have one!
The flip-side of the argument is that the lease on the Buzz 146's is almost up and it would make sense for Buzz to acquire more cost effective a/c than the expensive 146's.
FH
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Speak your mind - It proves you have one!
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If KLM did buy GO, and the subsequent "Buzz/GO merger" Airline was proving to be an obstacle to a future merger of KLM/BA, its quite possible that BA would make KLM divest itself of the Low Cost Carrier as a pre-condition of the merger. So, no major worries there....
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"Airspeed is life.....Altitude is life insurance!"
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"Airspeed is life.....Altitude is life insurance!"
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Some weeks back in one of his usual attacks on the competition, Ryanair's CEO, Michael O'Leary, questioned why - if Go was as good a deal as was being made out by BA - its Chief Executive, Barbara Cassani was not mounting a management buyout.
Why not, indeed?
[This message has been edited by The Guvnor (edited 04 March 2001).]
[This message has been edited by The Guvnor (edited 04 March 2001).]
Why not, indeed?
[This message has been edited by The Guvnor (edited 04 March 2001).]
[This message has been edited by The Guvnor (edited 04 March 2001).]
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Why on earth would an airline being flogged off expect to have its name transferred to an airline which is doing fine? if buzz absorbs Go as a result of an acquisition by KLMUK, either a totally new name should be used, or the airline should continue to be called buzz.
Hope the 146s stay for a while though!!
Hope the 146s stay for a while though!!
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Surely if KLM buy GO it will only be good for one party...i.e KLM!
Hope it works out for everyone.
Cheers
007
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Hear All...See All...Say Now't.
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(I'm away for a while!)
Hope it works out for everyone.
Cheers
007
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Hear All...See All...Say Now't.
[email protected]
(I'm away for a while!)
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Guvnor,
When will you learn to keep your big mouth shut!
Barbara Cassani is an employee of BA, as Chief Executive of GO. Any talk of a management buyout would be a conflict of interest, unless it was done with BA's permission.
On the one hand her employers are expecting her and her board of directors to be out there talking GO up to prospective buyers. How then can she be talking to BA about a management buyout.
So, do us all a favour. Get your airline up and running successfully, THEN come on here and talk intelligently about the airline business. Otherwise just shut the F**k up.
When will you learn to keep your big mouth shut!
Barbara Cassani is an employee of BA, as Chief Executive of GO. Any talk of a management buyout would be a conflict of interest, unless it was done with BA's permission.
On the one hand her employers are expecting her and her board of directors to be out there talking GO up to prospective buyers. How then can she be talking to BA about a management buyout.
So, do us all a favour. Get your airline up and running successfully, THEN come on here and talk intelligently about the airline business. Otherwise just shut the F**k up.
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ADC you are (as usual) showing your lack of commercial/corporate knowledge. Not only is there nothing whatsoever preventing BC from doing a management buyout; it was being positively encouraged by the bods at the top of Waterside.
Conflict of interest indeed!!
Conflict of interest indeed!!
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Guvnor,
I normaly have a lot of respect for what you say but I have to disagree with you on this one.
BC does have a conflict of interest here, on the one hand she has to try and get the best price for her epmloyers, on the other if she does a buyout she will want the cheapest price.
She is in a very tricky situation but she is a shrewd cookie and will no doubt have a way round it.
I normaly have a lot of respect for what you say but I have to disagree with you on this one.
BC does have a conflict of interest here, on the one hand she has to try and get the best price for her epmloyers, on the other if she does a buyout she will want the cheapest price.
She is in a very tricky situation but she is a shrewd cookie and will no doubt have a way round it.
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autobrakemedium - take it from me, the head honchos at Waterside were pushing her to do an MBO - to the extent that they were even prepared to stump up (limited) guarantees!!
You'll recall early on that she was in fact the front runner - but at the end of the day I understand that she felt that it wasn't worth it and will therefore probably be returning to BA in the event of a sale.
It also looks as if BA's 'internal' sale of Go to the Bland Group (owners of GB Airways) has fallen through ... could it possibly be that Go may yet turn out to be another Millenium Dome?
You'll recall early on that she was in fact the front runner - but at the end of the day I understand that she felt that it wasn't worth it and will therefore probably be returning to BA in the event of a sale.
It also looks as if BA's 'internal' sale of Go to the Bland Group (owners of GB Airways) has fallen through ... could it possibly be that Go may yet turn out to be another Millenium Dome?
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"Take it from you" !!!!
Why on earth should we? It is YOUR lack of commercial/corporate knowledge which is obvious to everyone ( So what IS happening to Caledonian Wings then).
All the talk of a management buyout of GO is a great way to get the company devalued. Imagine bidding for a company where you knew in advance that the Board were openly competing against you for ownership. I don't think you would feel you could win their support for your proposals eh? Or that you could count on their support if you won the bid.
Now, I wouldn't be surprised if one or both of the Capital Investment groups were planning to bring the GO board in as part of their bid, if they are invited by BA to be in the final two. That would make sense. In the same way that KLM are probably talking (or being talked to) by the same people to join their bid, if they get through.
But if BC was out in the marketplace openly drumming up support to buy GO at the lowest possible price, it would be the same thing as insider trading and would land her in serious trouble with the board of BA
[This message has been edited by ADC (edited 27 February 2001).]
Why on earth should we? It is YOUR lack of commercial/corporate knowledge which is obvious to everyone ( So what IS happening to Caledonian Wings then).
All the talk of a management buyout of GO is a great way to get the company devalued. Imagine bidding for a company where you knew in advance that the Board were openly competing against you for ownership. I don't think you would feel you could win their support for your proposals eh? Or that you could count on their support if you won the bid.
Now, I wouldn't be surprised if one or both of the Capital Investment groups were planning to bring the GO board in as part of their bid, if they are invited by BA to be in the final two. That would make sense. In the same way that KLM are probably talking (or being talked to) by the same people to join their bid, if they get through.
But if BC was out in the marketplace openly drumming up support to buy GO at the lowest possible price, it would be the same thing as insider trading and would land her in serious trouble with the board of BA
[This message has been edited by ADC (edited 27 February 2001).]
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ABM = Are you saying that every Management Buy Out there has ever been has been a conflict of interest?? Surely BC is not handling this sale on her own, if at all.
I would think that a sale like this would be handled from the top of BA itself.
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You fly em we'll fill em!
I would think that a sale like this would be handled from the top of BA itself.
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You fly em we'll fill em!
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No I am not, but most MBO's are done so outright, not 'in competition' to a conventional sale.
I know for a fact that Babs has a lot to do with the sale of Go.
I think that ADC & Guvnor have other issues going on here!
[This message has been edited by autobrakemedium (edited 27 February 2001).]
I know for a fact that Babs has a lot to do with the sale of Go.
I think that ADC & Guvnor have other issues going on here!
[This message has been edited by autobrakemedium (edited 27 February 2001).]
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ADC - as usual, you're showing what a complete pratt you are. A management buyout (MBO) is done by a company'smanagement hence the name (which should have been an easy giveaway even for someone like you! ) and is an extremely common way for a large company to divest itself of an unwanted subsidiary.
Investors, by and large, invest in management teams - you can have the best business idea in the world, but if you haven't got the right team, it will be a seriously uphill struggle to finance it. I therefore think that your little scenario that BC would sabotage a deal if she didn't get her own way with an MBO doesn't hold water.
I have it on very good authority that an MBO was mooted and discussed with several financiers - and as I previously said, BA were prepared to give limited guarantees as part of the package if BC took it over (but not anyone else).
She was therefore in the role of 'preferred bidder' (kind of like the Millenium Dome) but having taken a long, hard look at things she's no longer in the running (again, kind of like the Millenium Dome).
Now, if the company's senior management don't have sufficient faith in things to pull together an MBO (and bear in mind that originally the price being talked about was around £300 million - it's now hovering around the £100 - 150m mark, depending on who one talks to) - then why should an investor think they can do better ... unless of course they have a better management team to put in place?
The villain of the piece - if indeed there is one - is Stelios who took the market something rotten with his flotation. As a result, they really are not interested in low cost airlines (except FR) - the old adage of "once bitten, twice shy" applies.
My perception is that this probably wouldn't apply in the case of institutional investors (unless they b(r)ought a team in) - and nothing I have seen from Buzz/Air UK gives me any faith in their existing people being any better than BC and her existing team.
BC is a very tough cookie - she was heavily involved with Operation Covent Garden - and her hubby is well connected in the City. If she really thought she could make a go of things (excuse the pun! )I have no doubts whatsoever that she could have pulled it off to the satisfaction of all concerned.
Add to that the lack if interest from Bland (the latest 'preferred bidders') and I think that BA have their very own Millenium Lemon on their hands.
) and is an extremely common way for a large company to divest itself of an unwanted subsidiary.Investors, by and large, invest in management teams - you can have the best business idea in the world, but if you haven't got the right team, it will be a seriously uphill struggle to finance it. I therefore think that your little scenario that BC would sabotage a deal if she didn't get her own way with an MBO doesn't hold water.
I have it on very good authority that an MBO was mooted and discussed with several financiers - and as I previously said, BA were prepared to give limited guarantees as part of the package if BC took it over (but not anyone else).
She was therefore in the role of 'preferred bidder' (kind of like the Millenium Dome) but having taken a long, hard look at things she's no longer in the running (again, kind of like the Millenium Dome).
Now, if the company's senior management don't have sufficient faith in things to pull together an MBO (and bear in mind that originally the price being talked about was around £300 million - it's now hovering around the £100 - 150m mark, depending on who one talks to) - then why should an investor think they can do better ... unless of course they have a better management team to put in place?
The villain of the piece - if indeed there is one - is Stelios who took the market something rotten with his flotation. As a result, they really are not interested in low cost airlines (except FR) - the old adage of "once bitten, twice shy" applies.
My perception is that this probably wouldn't apply in the case of institutional investors (unless they b(r)ought a team in) - and nothing I have seen from Buzz/Air UK gives me any faith in their existing people being any better than BC and her existing team.
BC is a very tough cookie - she was heavily involved with Operation Covent Garden - and her hubby is well connected in the City. If she really thought she could make a go of things (excuse the pun!
)I have no doubts whatsoever that she could have pulled it off to the satisfaction of all concerned. Add to that the lack if interest from Bland (the latest 'preferred bidders') and I think that BA have their very own Millenium Lemon on their hands.