Lufthansa buys up most of Air Ber­lin

Plans to in­vest €1.5 bil­lion

Pretoria News - - BUSINESS REPORT - An­drew McCathie

GER­MAN air­line Lufthansa is to buy large parts of in­sol­vent ri­val Air Ber­lin, said Lufthansa chief ex­ec­u­tive Carsten Spohr, with plans to in­vest €1.5 bil­lion (R24.12bn) into the takeover of the na­tion’s sec­ond-big­gest car­rier.

Lufthansa and Air Ber­lin were to sign a con­tract later yes­ter­day to ac­quire sec­tions of the em­bat­tled car­rier, which filed for in­sol­vency in Au­gust af­ter its main share­holder, Abu Dhabi-based Eti­had Air­ways, halted fi­nan­cial aid for the group.

“This is in­deed a big day, which we’re go­ing to seal with a sig­na­ture in a few hours,” Spohr said, send­ing Air Ber­lin’s shares rock­et­ing up by 51 per­cent in early morn­ing trad­ing on the Frank­furt Stock Mar­ket.

In­vestors be­lieve that Lufthansa will profit from the debt-laden Air Ber­lin’s breakup, driv­ing up shares in the Cologne-based group by 2.4 per­cent, to €25.6, on the Frank­furt bourse even be­fore Spohr’s an­nounce­ment.

Apart from Lufthansa, Bri­tish bud­get car­rier Easy­jet was seen as the other ma­jor con­tender to take over the em­bat­tled air­line, or parts of the group, which has more than 8 000 em­ploy­ees, 140 air­craft and key air­port land­ing slots.

Spohr told the daily Rheinis­che Post yes­ter­day that Lufthansa plans to in­vest €1.5bn in tak­ing over 81 Air Ber­lin air­craft – about half of the car­rier’s fleet – and hir­ing 3 000 of its em­ploy­ees.

Ne­go­ti­at­ing

Easy­jet is ne­go­ti­at­ing with Air Ber­lin to pos­si­bly ac­quire the re­main­ing 20 to 30 air­craft from the car­rier, which last year ran up a loss of about €782 mil­lion and has debts to­talling nearly €1.2bn.

Air Ber­lin has al­ready said that it is hope­ful that 80 per­cent of its em­ploy­ees will be able to find new jobs.

Spohr told the Rheinis­che Post he did not be­lieve Lufthansa’s deal with Air Ber­lin would re­sult in higher air­fares. In­stead, he saw ticket prices fall­ing.

“The com­pe­ti­tion will in­ten­sify in both Europe and world­wide,” he told the news­pa­per. “We are as­sum­ing fur­ther de­clines in prices,” he said.

Kept fly­ing

Air Ber­lin has kept fly­ing since Au­gust as a re­sult of the Ger­man govern­ment pro­vid­ing it with a bridg­ing loan of €150m.

How­ever, on Mon­day, Air Ber­lin an­nounced that it would end all flight ser­vices by Oc­to­ber 28.

Flights op­er­ated by Air Ber­lin sub­sidiaries Niki and LG Wal­ter, which are not in­sol­vent, will con­tinue in­def­i­nitely, the com­pany said. – dpa

A pas­sen­ger air­craft, op­er­ated by Air Ber­lin, lands at Tegel air­port in Ber­lin, Ger­many. In­vestors be­lieve that Lufthansa will profit from the debt-laden Air Ber­lin’s break-up.

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