Over the past 2 days, Lufthansa has been in formal talks with Air Berlin’s leadership regarding the sale of Air Berlin’s assets to LH. Though other bidders are expected to crop up including Ryanair, Thomas Cook and Easyjet, it appears that the battle for Air Berlin may be over before it even begins. While AB is publicly saying that it is possible that more than one suitor may be involved, it appears unlikely that a serious threat would be posed to LH’s chances at this point.
Already with an advantage thanks to the wet lease agreement currently in place for 40 AB aircraft, it looks as though Lufthansa will have little problem in taking over the lease on 90 of Air Berlin’s 140 aircraft, including the ones already under LH’s control.
Lufthansa is in solid win-win position at this point. Not only does it come through as a ‘Champion’ for keeping a German airline German, it will exponentially increase its Eurowings presence in Europe and the rest of world by immediately rebranding the AB birds into Eurowings and expanding their route network.
With German elections looming next month, it is also a fortunate public relations coup for the German gov’t by taking on an active role in bridging a €150 million loan to AB to remain solvent while the details of an LH take over are ironed out. Unlikely that the German gov’t at this point would support a sale of one of their flag carriers to Ireland’s Ryanair or an equally unattractive option in Easyjet, Thomas Cook, or others.
When flight LX7545 arrived in Zurich after a short hop from Geneva on August 15, it marked the end of an era in SWISS aviation. With the completion of this flight came the retirement of SWISS’ last Avro RJ100 aircraft, one of 21 that had served SWISS dutifully for 15 years. In addition to the RJ100, SWISS had also operated 4 of RJ85 variant.
During its 2 decades of service, this workhorse earned the nickname of ‘Jumbolino’ due to the fact that it hung 4 engines from its wings as it sought to imitate much larger aircraft even though it served as a short haul specialist.
SWISS’ last RJ100 arrives to a water cannon salute after completing its final flight. (Photo Credit: SWISS).
According to SWISS, the RJ100 fleet flew over 700,000 hours and operated well over a half-million flights during its successful tenure with the airline.
The retirement of the Jumbolino was primarily due to the addition of Bombardier C-series aircraft to the fleet. With the C-series, SWISS gains substantial operational improvement and capacity over the RJ100. Currently there are 10 C-Series (8 of the -100, and 2 of the -300 variant), with plans for 20 more to join the fleet by the end of next year.
3 RJ100s remain in service with Brussels Airlines but their retirement is planned before the end of the year. Lufthansa Group will no longer operate the aircraft type after SN retires their 3 birds.
Earlier today, Air Berlin had done what most of us were expecting for some time when they filed for Bankruptcy protection. The filing came primarily as a result of Etihad’s withdrawing of any more funding to help keep the airline viable. Etihad had been a major stakeholder in ‘AB’ since January 2012.
The bankruptcy leaves Air Berlin in shambles as it is now left to scramble to either reorganize, sell off units, or simply cease operations. As it stands now, the German government has stepped in with a €150 million bailout that will keep Air Berlin operational for 3 months. During this time, ‘AB’ will be able to run as normal a schedule as possible, and ensure the employment of its 7,300 workers. This is especially important since we are in the midst of holiday travel season in Europe.
During this period, Lufthansa will continue business as usual as it relates to the 38 aircraft that it sublet from Air Berlin earlier this year in an effort designed to help AB regroup their operation.
Over the next weeks and months, suitors will emerge hoping to take over important gate space at airports where Air Berlin operates. Of course, with Berlin and Dusseldorf being the main hubs for AB, I suspected a heated bidding war to arise between the likes of Easyjet and Ryanair as they hope to make further inroads against Lufthansa on LH’s home turf.
Ryanair is already whining about LH having an unfair advantage due to all this happening in Germany, but Ryanair whines because it is what it does best when it doesn’t get its way.
Lufthansa has stated that it expects to compete successfully for the Air Berlin business due to its ‘home field’ advantage and its existing relationship with Air Berlin. In fact, LH is already in talks with German and Air Berlin officials to craft a way forward that minimizes the impact of a complete shut down of Air Berlin.
Call it luck or brilliance, but Lufthansa appears to have played Air Berlin perfectly. LH did not spend much time, money, or manpower to take on Air Berlin directly with their Eurowings unit. Instead they saw the writing on the wall several months ago and waited patiently for their opportunity to arise. Along the way, they offered help to support their fellow ‘countryman’, knowing full well that AB did not have a chance at survival and that Etihad would pull it’s life line from Air Berlin. Now in the end, Eurowings is most likely to be the biggest benefactor and should see an exponential increase in size and presence in Europe’s Low Cost Carrier market. Much to the chagrin of RyanAir, Easyjet, and others.