BA’s bid for Indian carrier Go Air is grounded

British Airways planned an audacious, multi-million pound takeover of one of India’s leading airlines - but the scheme was derailed by problems with industry-ownership laws.
The target was Go Air, a rapidly growing domestic carrier based in Mumbai. BA wanted to take a controlling or significant minority share, with senior industry sources saying it was ready to pay up to $600m (£371.2m) for the stake.
Such cross-border deals are normally out of the question in commercial aviation, which has tough rules preventing foreign nationals owning or taking control of airlines.
BA aimed to get round the restrictions by setting up an Indian intermediary company to hold its investment in Go Air.
Legal difficulties overwhelmed the deal within the past few weeks, however. It is understood BA may negotiate a marketing alliance with Go Air instead, with the Indian airline using BA flight codes on its domestic network. BA declined to comment yesterday. Revelation of the plan comes at a crucial time for BA. This week it is likely to unveil some grisly quarterly results. Second-quarter pretax profits could fall to about £50m, compared with last year’s £304m, analysts believe.
BA’s decision to pursue an Indian tie-up has piqued the interest of rival airline executives, who have been focused on the stuttering progress of its planned merger with Spain’s flag carrier, Iberia.
“I think it indicates where they think the real future of the airline industry lies, and where their next deal might come from – India or China,” one said.
02/11/08 Times Online, UK

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Categories: Foreign Nov 2008, GoAir Nov 2008, New Nov 2008