Max Kingsley-Jones/LONDON

CityFlyer Express says that no significant changes will result from the £75 million ($124 million) take-over by its franchise partner, British Airways. The London Gatwick based regional airline has a conditional agreement with BA to purchase the entire company.

The deal is subject to formal approval by the UK's Secretary of State for Trade and Industry, which is expected within weeks. Since its 1991 launch, 61% of CityFlyer has been owned by four London-based venture capitalists, with the rest held by the airline's management.

Once the transaction is approved, the two airlines will increase the level of integration of their networks, but CityFlyer managing director Brad Burgess emphasises that the carrier will remain an independent division, with its own air operator's certificate and its own board and management team. BA's other regional subsidiary, Brymon Airways, operates in a similar fashion.

CityFlyer will continue to have responsibility for its financial performance and business plan, but the link will enable both airlines to "-improve the process of making the best use of resources", says Burgess. The deal with BA followed a decision earlier this year by CityFlyer's investors to seek a buyer. "We went looking to see what we could get," says Burgess. The deal was important for BA as CityFlyer, which has been its franchise partner at its Gatwick hub for five years, holds over 12% of Gatwick's slots. BA now will control more than 40% of the slots at the London airport.

Burgess declines to disclose the extent of negotiations with other potential buyers, but rejects claims by Virgin Atlantic boss Richard Branson that he was never offered a fair chance to buy the airline. "If we had received a formal offer from Virgin it would have been studied, but we never received one," says Burgess. Branson says he intends to file a complaint against the deal to the UK Office of Fair Trading.

For some months now CityFlyer has been pondering the acquisition of larger jets to add to its 11 ATR turboprops and five British Aerospace Avro RJ100s, with the Airbus A320 family and Boeing 737 under evaluation. A decision to move up to larger aircraft will not be made until the new year, and the new aircraft will not be introduced before the second quarter of 2000.

Source: Flight International