AVIATION: EasyJet will take over Go in a £374 million sterling (€598 million) deal that will create Europe's largest low-cost airline.
The takeover, which will allow EasyJet to leapfrog Ryanair, hitherto the leader of the no-frills airline sector in Europe, will be financed partly through a deeply discounted rights issue to raise £276.7 million , and partly through £113.3 million of cash.
Saying he welcomed the consolidation of the European low fares market into two large operators, Mr O'Leary added that Ryanair would continue to offer significantly lower fares than EasyJet.
"We wish them well with these acquisitions, and I will be taking lessons in humility now that we are - for the time being - Europe's second largest low fares airline," said Mr O'Leary.
"However, since Ryanair's fares and costs are some 60 per cent lower than those of the enlarged EasyJet group, we will still be the fastest growing and most profitable low fares airline, and we will continue to grow organically over time to become Europe's largest scheduled airline."
The terms of the deal were strongly endorsed by investors, and the EasyJet share price jumped by 11 per cent or 50p to close at 510p sterling.
The deal will trigger a fierce battle in coming weeks between Boeing and Airbus to win one of the biggest aircraft orders to be placed this year by the new company. Both EasyJet and Go were already negotiating multibillion dollar aircraft orders before the takeover, and the combined group is expected to order well in excess of 100 aircraft within two months.
The transaction is a financial coup for 3i, the UK venture capital group, which backed a £110 million sterling management buy-out of Go from British Airways.
Ms Barbara Cassani, Go chief executive, who has strongly opposed the sale to EasyJet, told staff she would leave by early July. Ms Cassani said six Go executives including herself would become millionaires from the sale. She would receive £9.5 million for her 4 per cent stake in Go.
