"UK airport operator to buy budget airline"

Saturday, September 25, 2004

Airport owner looks up with budget airline buy
By Michael Harrison
United Kingdom - The Independent


Planestation, the owner of Manston airport in Kent, agreed yesterday to buy 
EUjet, the no-frills airline which began services from there at the start of 
the month.

The deal values the budget airline at £4.5m and makes PlaneStation the first 
airport operator in the world to control its own airline.

PlaneStation already owned a 30 per cent stake in EUjet, which it acquired in 
May in return for a £2m cash injection. Now it is buying up a further 62 per 
cent of the airline by issuing £2.5m worth of share options to EUjet's founder 
and controlling shareholder, PJ McGoldrick, and its chairman, Ron Haylock.

The group also announced that it has raised £5.2m through a share placing to 
provide working capital for the development of EUjet, which hopes eventually to 
be carrying 2 million passengers a year.

Mr McGoldrick and Mr Haylock, who made his fortune building up a timeshare 
business, have been given warrants over 55.4 million PlaneStation shares which 
are exercisable at 4.7p in three years depending on certain performance 
conditions being met. The main one is that PlaneStation shares outperform the 
market by 25 per cent over the three-year period. Mr McGoldrick is also 
required to contribute €500,000 (£340,000) in working capital to EUjet and 
will join the board of PlaneStation.

Martin May, the chief executive of PlaneStation, admitted that vertical 
integration of the type represented by this deal had "gone out with the Ark" 
but he forecast it would make a comeback as airport operators and airlines 
sought to secure their future. "We are asset rich and EUjet has a revenue 
stream so putting the two businesses together at this stage in the cycle makes 
sense," he added. "As a result of this deal, EUjet has a future for ever at 
Manston."

EUjet has begun flights to 11 destinations from Manston (now known as Kent 
International Airport), including Amsterdam, Dublin, Prague and Nice, using two 
Fokker 100 jets. It plans to double its fleet and route network by Easter. So 
far it has sold 40,000 seats.

Mr McGoldrick said load factors were about 50 per cent but on some services, 
the plane was full and EUjet was flying 2,000 passengers each weekend. "It's 
building nicely and traffic levels are about what we expected but it's early 
days," he added.

Michael O'Leary, the chief executive of Europe's biggest no-frills airline, 
Ryanair, has forecast a "bloodbath" this winter in the low-cost sector. But Mr 
McGoldrick, himself a former Ryanair chief executive in the early 1990s, said 
the sale to PlaneStation had secured EUjet's future while there was a market of 
1.5 million people in its catchment area of Kent and no competition from other 
budget airlines.


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