Low-cost airline EasyJet has snapped up rival operator GB Airways after it was rejected by British Airways. The deal strengthens EasyJet's position at Gatwick Airport as it secures more take-off and landing slots.
GB has 15 Airbus planes that fly to southern Europe and north Africa. It operates under a franchise agreement with BA, which gave the major the right to buy the business.
BA turned down the offer as it moves away from franchising. Next October it will end a similar agreement with Loganair. It will launch its own services to replace some of the routes served by GB. The junior will continue to use the BA brand until March 29.
EasyJet now stands to occupy 24% of Gatwick slot and will fly around eight million passengers across 62 routes from the airport.
Andy Harrison, chief executive of EasyJet, 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."
EasyJet believes the deal will be earnings and returns enhancing in the current year, before one-off integration costs (some head office redundancy costs and re-branding, but not expected to be too significant).
The 15 aircraft (nine A320s and six A321s) all look to be leased and are compatible with EasyJet’s A319s. Profitability should build as overhead is eliminated; currently GB’s productivity is around half that of EasyJet. Post 2008 it will look to renegotiate staff on to EasyJet terms and conditions.
Stockbroker Collins Stewart said the low-cost carrier may incur some head-office redundancy and re-branding costs upon integrating GB, but not that EasyJet sees the deal as earnings and returns enhancing in the current year.
Analyst Andrew Fitchie added: 'The 15 aircraft all look to be leased and are compatible with EasyJet’s A319s. Profitability should build as overhead is eliminated; currently GB’s productivity is around half that of EasyJet.'
The acquisition sent EasyJet's shares up 4% to 604p, but not everyone in the City believes the carrier has a robust outlook. Richard Carter, analyst at Numis, reiterated his 'sell' rating on EasyJet. He said: 'This looks like a sensible deal but it does not alter our cautious stance on EasyJet which is predicated on likely yield weakness as a result of supply/demand disequilibrium over the winter.'
