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Lufthansa to swallow lion's share of Air Berlin

AFP  |  Berlin 

Years of struggle for Germany's second-ranked airline Air appeared on their final stretch today, as airborne behemoth Lufthansa announced plans to buy more than half the bankrupt carrier's planes.

The deal has sparked controversy in the European aviation sector, with the German facing accusations it helped steer the process under a plan to build the Frankfurt- based carrier into an all-conquering juggernaut.

Lufthansa will take over Air Berlin's Austrian subsidiary Niki, German subsidiary LGW and 20 further aircraft, guaranteeing all jobs at the two smaller firms, Air said in a statement.

The deal includes 81 of Air Berlin's 144 aircraft and 3,000 of its 8,500 staff, Lufthansa chief executive Carsten Spohr said in Berlin, hailing it as a "great day" for his company.

Meanwhile, negotiations with Easyjet -- the other bidder chosen for exclusive takeover talks -- "are continuing", Air said, offering no information about what the British firm hopes to buy or whether any Air Berlin staff will keep their jobs.

Spohr has suggested Easyjet is interested in up to 30 aircraft.

Lufthansa has yet to say how much it will pay under the deal, but Spohr told newspaper Rheinische Post today that the group would invest 1.5 billion euros (USD 1.8 billion) in its low-cost subsidiary Eurowings following the takeover.

He added that 80 planes was the largest addition to Lufthansa's fleet that competition authorities would accept.

"The European Commission will look very closely at this. We will support them," Andreas Mundt, head of Germany's federal competition authority, posted on Twitter.

"We will only be able to breathe when the Commission has finally confirmed the transaction," Air Berlin boss Thomas Winkelmann said in the company's statement.

Many internal German routes will in future only offer a choice between Lufthansa and Eurowings.

But Spohr told business daily Handelsblatt today that "we expect the competition authorities to examine the takeover at least from the point of view of European competition, not limit it to the German market alone."

While the authorities investigate, Air Berlin will operate flights as a subcontractor, as insolvency rules forbid it from flying on its own account after October 28.

Air Berlin triggered bankruptcy proceedings in August after losing a cash lifeline from its biggest shareholder Etihad Airways.

Its aircraft have been kept aloft by a 150-million-euro (USD 178 million) emergency loan from the German while details of the breakup were worked out.

German and international investors and competitors lined up, with an eye not only on Air Berlin's aircraft but also coveted takeoff and landing slots at crowded airports.

In the race for exclusive talks, Lufthansa and Easyjet reportedly beat out IAG -- owner of Iberia and British Airways -- and three bids of between 500 million and 600 million euros apiece from private investors.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, October 12 2017. 20:07 IST