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BA 'toils' to offload Go
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January 11, 2001: 10:37 a.m. ET
British Airways' planned sale of low-cost unit Go proves hard work
Staff Writer Abid Ali
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LONDON (CNNfn) - British Airways is facing an uphill task in offloading its low-cost airline Go, senior industry sources have told CNNfn.com.
BA, Europe's biggest airline, has had up to 30 applications for prospectuses but only a handful of applicants are still left in the running, with only one established airline considering its position.
"There's a number of venture capitalist circling," one source said, Go's chief executive Barbara "Cassini will probably stay on with one of the VCs if the money is right."
 Cassini was rebuked by British Airways when she first suggested the airline should consider selling the business in May.
Another source said British Airways had expected to raise as much as £300 million but the lack of interest has meant the airline has lowered its expectation and now values the business at around £150 million to £200 million.
British Airways declined to discuss price and possible buyers. The self-styled "world's favorite airline" expects to sell the business by the end of March, although the company said it may take a bit longer.
The only airline that refused to join rivals easyJet PLC, Ryanair Holdings PLC and Lufthansa (FLHA) in flatly denying any possible bid was KLM Royal Dutch Airlines NV, which said its reviewing its operations in the U.K., including Buzz its low-cost airline.
KLM, which broke off merger talks in September with British Airways that would have created the world's fourth largest airline, asked Goldman Sachs, BA's investment bankers charged with finding a buyer, for a prospectus in November.
BA may be reluctant to sell the no-frills airline to a European competitor, leaving the door open for U.S. and other international players to enter the low-cost market, estimated to be worth £1.4 billion by 2003, according to research from Euromonitor.
Ryanair Chief Executive Michael O'Leary told CNNfn.com in November he would have to be paid to take on the loss making airline.
Ryanair, one the world's most profitable low cost airlines, is hoping to carry about 9 million passengers this year, ranking it as Europe's fourth or fifth biggest airline.
Another rival easyJet said it has no interest in obtaining Go's Stansted, northest London, hub, its pilots, airplanes of other parts. "We're doing just fine on our own," spokesman Toby Nicol said.
British Airways, under the stewardship of Rod Eddington since last May, is trying to turn around a period of low profitability by selling more premium seats.
Many of BA's problems lie in its European operations. These lost £310 million last year partly because of cut-throat competition from a host of increasingly popular cut-price airlines that are blanketing the region with low fares for both leisure and business travelers.
Even Go, which BA set up in 1998 with an initial £25 million investment, has been gnawing at its parent's short-haul revenues. The budget carrier flies to 20 destinations from its hub at London's Stansted airport.
Go has yet to make a profit. Although revenue tripled to £100.6 million in the year ended March 31, 2000, it posted a loss £15.2 million, little changed from the previous year's £15.5 million deficit. 
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