Lufthansa snaps up parts of failed Air Berlin

The airline signed a €210m deal to buy parts of the insolvent Air Berlin

A Lufthansa airliner parks next to the Air Berlin aircraft at Tegel airport in Berlin, Germany. Photograph: Hannibal Hanschke/Reuters

A Lufthansa airliner parks next to the Air Berlin aircraft at Tegel airport in Berlin, Germany. Photograph: Hannibal Hanschke/Reuters

a
 

Lufthansa reinforced its position as Germany’s largest airline on Thursday by signing a €210 million deal to buy large parts of insolvent Air Berlin.

Lufthansa plans to use the Air Berlin assets to quickly expand its Eurowings budget business. News of the deal pushed Lufthansa shares up more than 3 per cent to their highest level in nearly 17 years.

Air Berlin, which has struggled to turn a profit over the last decade, filed for insolvency on August 15th, and a government loan has kept its planes aloft while its administrator negotiated with prospective buyers for parts of the business.

Lufthansa has agreed to acquire Air Berlin’s Austrian leisure travel airline Niki, its LG Walter regional airline and 20 additional aircraft, Air Berlin said in a statement.

“This contract provides new opportunities for jobs for a large part of our workforce. But we can only really breathe again when the EU Commission approves the deal,” Air Berlin chief executive Thomas Winkelmann said.

Lufthansa chief executive Carsten Spohr said earlier he expected the European Union to approve the transaction by the end of 2017.

However, Ryanair, which has previously called the talks a “stitch-up”, said it would be referring the matter to the EU competition authority in due course.

Andreas Mundt, head of the German cartel office, said the Commission would take a close look at the deal and that the German authorities would follow the process closely.

Talks to sell some of Air Berlin’s remaining assets to Britain’s easyJet and other bidders are continuing, Air Berlin said, without providing details.

EasyJet, which has a base at Berlin’s Schoenefeld airport, has been discussing acquiring 27 to 30 planes. Air Berlin previously said others, such as Thomas Cook’s Condor, could pick up some parts of the business.

EasyJet declined to comment on the progress of talks on Thursday.

Big Investments

Mr Spohr told a German paper earlier that his airline would be investing around €1.5 billion in total as a result of the Air Berlin deal.

That sum includes investment in new planes, for which the board freed up €1 billion of funds last month, the purchase price and the costs of taking on new staff.

Air Berlin, Germany’s second largest carrier, will cease operating flights this month, capping a turbulent summer for European carriers.

Italy’s national airline Alitalia is in administration and seeking investors too, British leisure airline Monarch collapsed at the start of this month.

Mr Spohr said on Thursday while he was not interested in the Italian carrier in its current shape he would be interested in talks to create a new Alitalia.

Analysts at Bernstein Research raised their rating on Lufthansa’s shares to “outperform” from “market-perform”, saying they expected a deal with Air Berlin to add around €70 to €90 million to annual operating profits at Eurowings in the medium term.

HSBC analysts lifted their target share price to €29 from €25 citing the imminent agreement with Air Berlin, a new multi-year labour deal with pilots announced this week and a positive trading performance this year.

-(Reuters)

a
The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.