Not long to Go

After rejecting approaches from other groups British Airways may be on the verge of closing a deal with 3i for the sale of its low cost airline Go.

The sale of British Airways' low-cost airline Go to UK private equity firm 3i is believed to be very close to being struck. The deal is expected to be worth around £100m.

British Airways has been in exclusive negotiations with 3i for several months after rejecting approaches from other groups. KLM, the Dutch national airline had, for instance, submitted a conditional bid with a view to merging it with Buzz, its own low cost airline.

Despite healthy profits by BA, Go has continued to be loss-making. The low cost airline, which was launched in 1998, has had to keep up with competition of other “no frills airlines” such as Easyjet and Ryanair. The ticketless airline, which is headquartered at London’s Stansted airport, last month opened its second base at Bristol International Airport.

According to the Financial Times the sale is part of the radical overhaul of the group’s loss-making short haul operations in Europe, which is being implemented by Rod Eddington, who took over as chief executive last year.

BA is being advised on the sale by Goldman Sachs and 3i is being advised by SG Hambros.