Lufthansa tightens its grip on German skies after buying the bulk of its rival Air Berlin

Lufthansa has spread its wings further, clinching a deal to buy up more than half of its bankrupt rival Air Berlin, in what its CEO Carsten Spohr described as “a milestone in the history of Lufthansa and Berlin.”

Lufthansa will pay around €210 million ($248 million) to buy 81 of Air Berlin’s planes and take on 3,000 of its 8,500 employees, as well as take over Air Berlin’s Austrian leisure travel airline Niki, and regional airline LG Walter. Spohr said that adding 81 planes to the Lufthansa fleet was the maximum that competition watchdogs would accept.

Spohr told the Rheinische Post (link in German) on Wednesday that that the group had earmarked €1.5 billion for takeover-related costs, such as taking on Air Berlin employees. He expects the deal to get EU approval by the end of the year.

Air Berlin filed for bankruptcy in August after its main investor Etihad Airways pulled out. The German government then stepped in to buy time for what was the country’s second-biggest airline with a €150 million loan until it could find a buyer.

The move drew fire from European competitors, which accused the German government of unfairly helping the Frankfurt-based Lufthansa get a leg up on the its EU rivals by offering Air Berlin a lifeline.

In August, Ryanair CEO Michael O’Leary slammed the government intervention as a “stitch up,” in August, and called on the EU competition authorities to block a Lufthansa takeover. He said he decided not to submit a bid as it was a “conspiracy” between the German government, Lufthansa, and Air Berlin that would drive up prices for customers.

Spohr rebuffed the accusation that Lufthansa was becoming a “threatening monopoly,” pointing out that the airline’s global market share was just 3% globally, and 14% in Europe. He said in the Rheinische Post that he expects airline competition to get even more intense, and that it’s only right that airlines that can’t break even should disappear from the market—he gave Monarch in the UK and Alitalia in Italy as examples.

Britain’s EasyJet is reportedly still in negotiations to buy some of the Air Berlin planes that haven’t been snapped up by Lufthansa.

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Author: QZ.COM

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