Is Lufthansa Looking To Buy Air Berlin? Yep……

Is Lufthansa Looking To Buy Air Berlin? Yep……

After comments made last week by Lufthansa’s CEO Carsten Spohr, it appears that Lufthansa is putting together a strategy that would allow it to absorb Air Berlin into Eurowings.   After years of struggling, and failed subsidies/investments by Etihad, it appears that Air Berlin is on life support and without intervention, could simply fade away.

Spohr, speaking before the Lufthansa Group Annual Shareholder’s Meeting, stated 3 criteria would need to be met before Lufthansa would feel comfortable writing a check for Air Berlin.   Specifically he addressed:

  • Air Berlin’s debt level of 1 BILLION Euro and a debt ratio of 4.5:1 makes it a VERY EXPENSIVE acquisition if LH were to acquire the liability.   Spohr suggested that if Lufthansa were to be interested in acquiring ‘AB’, the debt would have to be assumed by Etihad (Air Berlin stakeholder), or be disbursed by some other means before AB would be welcomed to the LH Group.  LH simply would refuse any deal that would involve assuming any of the debt
  • Anti-Trust Concerns from the EU would overshadow any thought of the acquisition.   Not only on a continental EU level, but also intra-Germany, since an AB acquisition by Lufthansa would leave Lufthansa as the only major airline within Germany.    Knowing the EU’s political leanings, it would be foolish to think that they would award a monopoly to Lufthansa.    This issue would create an opportunity for RyanAir or EasyJet to swoop in with proposals for Air Berlin which could be disastrous for Lufthansa.   After all, who wants RyanAir or EasyJet operating in their neighborhood.   Air Berlin joining Lufthansa would also lead to Air Berlin’s exit from OneWorld.
  • Before any deal would take place, Air Berlin would also be required to reign in their costs.    Progress is being made, but Air Berlin is not near being profitable, and again, Lufthansa has indicated that it does not want to inherit any liabilities should they decided to bid for Air Berlin.
  • Assurances would also need to be made for Air Berlin staff.   Any merger would almost certainly guarantee a significant amount of staff overlap and with worker protection laws in Germany being the way they are, Lufthansa will not be able to simply layoff unnecessary workers.    AB employs approximately 8500 people and accommodations would need to me made for those at risk of losing their jobs as a result of a merger.

 

Should LH find a way to navigate the regulatory gauntlet, and get others to take the liability left behind by Air Berlin, it would be an obvious coup for Lufthansa.    Considering that LH’s main focus over the last 3 years has been to build an LCC product that can take on, and beat the likes of RyanAir and EasyJet at their own game, plugging Air Berlin into Eurowings would catapult LH to the forefront of LCC operations in Europe.   The only problem is that Europe’s politics and Lufthansa’s competitors will do everything possible to keep Lufthansa from realizing that success.

 


EUROWINGS Introduces New Routes

EUROWINGS Introduces New Routes

Over the last few days, Eurowings has updated their timetable to reflect the launch of several new routes for the Fall/Winter of 2017/18.    The routes are primarily seasonal, either bringing passengers to warmer climates or taking them to winter hot spots for skiing.

Some of the flights will be operated by the aircraft that have been wet-leased by Lufthansa from Air Berlin, while others will fly under Germanwings flight numbers and aircraft.

The new routes are as follow:

Cologne – Grenoble effective October 29 will begin 1x/week service (Sunday).

Dusseldorf – Marrakech effective November 4 will begin 1x/week service (Saturday).

Dusseldorf – Zagreb effective October 31 will begin 2x/week service (Tuesday / Thursday).

Munich – Barcelona effective October 29 will begin 4x/week service (Monday/Tuesday/Friday/Sunday).

Munich – Fuerteventura effective October 29 will begin 2x/week service (Tuesday / Sunday).

Munich – Lanzarote effective November 1 will begin 1x/week service (Wednesday).

Munich – Las Palmas effective October 31 will begin 2x/week service (Tuesday / Saturday).

Munich – Marrakech effective November 3 will begin 1x/week service (Friday).

Munich – Skopje effective October 31 will begin 2x/week service (Tuesday / Friday).

Munich – Tenerife South effective October 30 will begin 2x/week service (Monday / Thursday).

Salzburg – Birmingham effective October 30 will begin 2x/week service  (Thursday / Saturday).

Salzburg – Glasgow effective December 9 will begin 1x/week service (Wednesday).

Salzburg – London Stansted effective October 29 will begin 4x/week service (Monday/Wednesday/Friday/Sunday).

Salzburg – Manchester effective December 4 will begin 2x/week service (Monday / Friday).

H/T: AirlineRoute.net
 

First of Air Berlin’s A320s Enter Service In Austrian Colors……

First of Air Berlin’s A320s Enter Service In Austrian Colors……

Austrian Airlines on March 7 introduced the first wet-leased Air Berlin A320 into service for Lufthansa Group.   The aircraft,  D-ABZA, flew in Austrian colors from Vienna to Skopje.   D-ABZC entered service for OS in March 8.

D-ABZA and D-ABZC are the first 2  of 5 Air Berlin aircraft that will operate for Austrian.  Under the wet-lease agreement, the aircraft will carry OS colors, however the crew that you will see aboard the plane will be dressed in their Air Berlin uniforms since technically the employees are on lease from Air Berlin.

D-ABZA shows off her new Austrian Colors. Photo courtesy of Austrian Airlines.

 

This opportunity for Austrian to expand their fleet and reach comes after Lufthansa agreed with Air Berlin to sublet 40 Air Berlin aircraft in order to help Air Berlin restructure their operations in an attempt to return to profitability.   Air Berlin’s key investor, Etihad, was instrumental in working with LH to make the deal possible.

D-ABZC in her old AB colors.....

D-ABZC in her old AB colors…..

Most of the 40 aircraft will be painted in LH Group’s Eurowings livery and will be deployed on routes that EW normally serves along with a few new additions thanks to having an airport full of new planes to deploy.