The low cost airline, Easyjet, has announced that it is buying its rival Go for...
The low cost airline, Easyjet, has announced that it is buying its rival Go for 374 million pounds ($550 million).
The chairman of Easyjet, Stelios Haji-Ioannou, said: ?This is one of the most exciting developments in Easyjet's history?.
The airline will pay for the takeover by raising 276.7 million pounds through a new rights issue, where it will offer new shares to existing shareholders at 265 pence a share.
The airline announced earlier this month that it was in talks with its rival about a possible takeover.
The chief executive of Go, Barbara Cassani, had made it clear she was not happy with the proposed deal.
She will not be joining the new group in any capacity and she will leave her job at Go when the takeover is completed.
Go, which operates mainly out of Stansted, was sold by British Airways last year for just 110 million pounds.
The main shareholder was the venture capital company 3i.
The new combined airline will become the largest low cost airline in Europe, flying more planes and serving more routes than the current number one, the Ireland based Ryanair.
It will have UK bases at the Gatwick, Luton, Stansted, East Midlands and Bristol international airports.
Easyjet's chief executive Ray Webster said that the combination with Go would not mean an increase in fares.
?This is an opportunity to keep prices low,? he said ?That is the beauty of our model. We need low fares to stimulate the market that we are developing.?
In a statement, Easyjet's directors said that in order for the new group to be successful, it would have to compete not only with low cost carriers but also with national flag carriers such as British Airways, Air France and KLM.
And the directors said that they expected competition between the traditional airlines and the low cost carriers to intensify.
Go has concentrated very much on business travellers, but Easyjet says that more than fifty percent of its passengers are business travellers too.
Easyjet also says that the companies' business models are exactly the same.
But there is very little overlap on the two airlines' routes.