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easyJet buys budget rival for £103.5m

GB Airways is primarily a London Gatwick-based airline operating to 31 destinations across Southern Europe and North Africa under a franchise agreement with British Airways.

It flies 15 Airbus aircraft on a total 39 routes across southern Europe and North Africa under a franchise agreement with British Airways.

The acquisition is part of London Luton-based easyJet’s expansion strategy and strengthens its customer offering at Gatwick. The purchase adds valuable take-off and landing slots at Gatwick and the opportunity to accelerate easyJet’s route development.

Following the acquisition, easyJet will operate 24% of Gatwick’s slots and will fly approximately 8 million passengers across 62 routes from Gatwick.

GB Airways will be fully consolidated into the easyJet business model by early 2009. The acquisition will be positive to easyJet’s earnings per share and return on equity in easyJet’s current financial year, before one-off integration costs.

Andy Harrison (pictured), 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.

“The deal will bring major benefits to both easyJet and GB Airways customers, delivering a wider choice of destinations and creating clear value for our shareholders.

“We expect the acquisition to be earnings positive in our current financial year and in the longer-term we will transition the GB Airways operation to easyJet’s cost base and operating margin levels.

“”We expect to achieve both cost and revenue synergies as we expand our business at Gatwick.””

easyJet will co-operate with British Airways to ensure a smooth and orderly transition for customers. GB Airways will continue to operate all routes under the British Airways brand until March 29 2008, after which flights will operate under the easyJet brand.

GB Airways chief executive Kevin Hatton said: “”The sale agreement brings to an end a period of uncertainty about the future direction of our company. We are pleased that the business and customer base built up by GB Airways will now be secured and strengthened. We will fulfil our outstanding obligation as a franchise partner to British Airways and then look forward to a smooth operational merger with easyJet.””

The transaction is expected to complete no later than January 31 next year.”

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