Lufthansa and Etihad in ‘tie-up meetings’
Germany’s Lufthansa and Etihad Airways are in talks to possibly merge the two airlines, Italian newspaper Il Messaggero said in an unsourced report on Tuesday, boosting the German airline’s share price.
According to the paper, managers from the companies have been examining the possibility of Etihad buying a 30%-40% stake in Lufthansa through a sale of new shares to the Abu Dhabi state-owned airline.
In a second step, the two airlines would look at a fullblown merger, the paper said.
Any combination would affect loss-making Italian airline Alitalia, which is 49%-owned by Etihad and is in the midst of a restructuring expected to include job cuts and the grounding of aircraft.
Lufthansa and Etihad declined to comment on what they described as “speculation”.
Lufthansa shares were up 6% on Tuesday.
In December, Lufthansa and Etihad signed a flight codesharing deal after Lufthansa agreed to lease 38 crewed aircraft from Air Berlin, which is part-owned by Etihad.
ANY COMBINATION WOULD HAVE AN EFFECT ON LOSS-MAKING ITALIAN AIRLINE ALITALIA
Analysts reacted with scepticism to the report, citing the foreign ownership rules governing international traffic rights, and questioning what the benefits for Lufthansa would be.
In Europe an airline must be majority-owned by EU investors in order to maintain its traffic rights under international air service agreements.
Lufthansa is almost 69% owned by German investors but 13% is in the hands of US investors and a further 9% is owned by other nationalities.
In addition, if Etihad wished to buy more than 30% of Lufthansa, it would have to make an offer for the company as a whole, according to German takeover rules.
Etihad’s local rival, Qatar Airways, has built up a 20% stake in British Airways owner IAG through shares on the open market. That has boosted links between Europe and the AsiaPacific region.
However, Credit Suisse said Lufthansa already had joint ventures with Singapore Airlines, Air China and All Nippon Airways covering the region.
Greater co-operation with Lufthansa could help Etihad, especially given the growth of Qatar Airways, CAPA-Centre for Aviation senior analyst Will Horton said.
“The rapid growth of Qatar Airways and its future expansion will make it harder and costlier for Etihad to stay relevant on its own — everything else aside,” he said in an e-mailed comment.