With regard to Go I read this on ATI yesterday:
UK-based low-fares airline Go plans to be operating 80 aircraft by 2006 and take its shares public this year or next to help finance its fleet expansion plans, its chief executive has revealed.
Go chief executive Barbara Cassani told the Raymond James growth airline conference in New York today that the carrier plans to grow its fleet at a rate of 30% a year to have 80 aircraft in service in 2006. Go expects to continue opening “one or two” new network focus cities a year throughout the next several years as it pursues what she says are “tremendous” growth opportunities available to European low-fares airlines.
Cassani confirms Go is planning to launch an initial public offering (IPO) of shares in 2002 or 2003 to help finance its fleet expansion and to repay debt, but says “it is far too early to say” yet what percentage of its overall shareholding it plans to offer publicly and if majority shareholder 3i will want to cash out of its investment at that point.
“We’re in a listening mode,” she says, bearing in mind her audience today of US investors and financial institutions. “We’d like your input.”
Saying the potential in Europe for growth of low-fare services “is almost limitless”, given that 13 European Union countries still do not have any low-fare hubs and most of those that do have just one, Cassani says Go is in discussions with both Airbus and Boeing over its potential fleet growth needs.
Go has not decided whether it should stick with the Boeing 737-300 that forms its only existing fleet type – the airline is now operating 18 737-300s – or, like all other successful low-fares carriers throughout Europe and the USA, upgrade to new-generation equipment.
Cassani acknowledges that newer 737s and Airbus narrowbodies have better direct operating costs per seat than the 737-300, but points out that in the current airline industry downturn prices and lease rates for second-hand 737-300s “are so low that they are still very attractive” in terms of their overall operating costs.
“We will look to what’s best for the network,” she says, noting that finance director Andrew Cowen is leading a team of Go managers which is reviewing all the fleet expansion options available.
Cassani says that although Go’s 4.17p (5.88c) unit cost per available seat kilometer (ASK) is higher than Ryanair’s, the Irish carrier provides a goal for Go to seek. She says Go’s ASK cost is “virtually the same” as that of UK rival easyJet.
Although Go’s revenues “wobbled for about six weeks”, after the 11 September attacks its fares and profitability are now “back on budget”. Go still expects, however, to post a loss for the second half of its financial year, which ends on 31 March.
“We’ve budgeted to lose money in the second half – you do that when you’re growing as fast as we are,” says Cassani. However, she says, Go will definitely produce a pre-tax profit for its 2001-2002 financial year that is somewhere between the ₤4.2 million ($5.9 million) it earned before tax in the previous year and the ₤16.9 million pre-tax surplus it reported at this year’s halfway stage.