In reports coming from Italian media (Italian newspaper Il Messaggero) this morning, it appears that Lufthansa and Etihad are discussing a merger that would combine the 2 airlines.
As of now, the discussions are said to revolved around 2 options. One being Etihad taking a 40% stake in Lufthansa and the other being a complete merger of the 2 carriers.
This news is just reaching the wires and has not been substantiated by either side, so there may be more smoke than fire to this development. However, LH and Etihad have been working closely together when dealing with Air Berlin, so it should come as no surprise that their conversations may have expanded to included a larger relationship.
There is a myriad of regulatory hurdles that would have to be cleared in order for any serious deal to take place. These regulations limit foreign ownership of a European carrier as well as other restrictions, so it may not be as easy to accomplish as the press would like you to believe!
In an announcement from Frankfurt earlier today, Lufthansa has announced that it has entered into a codeshare arrangement with Etihad geared towards making it easier for the airlines to expand their reach.
The expansion of the relationship between the 2 carriers continues to evolve after LH agreed to lease a substantial part of Air Berlin’s fleet to help AB stave off further financial turmoil. Etihad is a major stakeholder in Air Berlin and they were very supportive of the arrangement which allows AB to refocus their efforts. That deal was finalized today as well.
The codesharing relationship starts in January 2017 and will cover Etihad’s 2 daily flights between Frankfurt and Abu Dhabi and their 2 daily flights between Munich and Abu Dhabi. What this means is that there will be an Lufthansa flight number (LH xxx) assigned to the Etihad operated flights, so that Lufthansa passengers can book travel on those specific Etihad flights directly from LH.com or through their travel agents.
In turn, Etihad will will assign their flight numbers to Lufthansa operated flights that operate from Frankfurt to Rio de Janeiro and Bogota. This allows Etihad to book their passengers directly onto these LH flights.
Please note that flights operated by Etihad will not earn any miles towards Miles & More balances, or any other Star Alliance Frequent Flyer program.
In news out of Germany in the last several hours, it appears that Lufthansa is a little bit more than serious about acquiring routes and aircraft from a struggling Air Berlin.
In a potential deal between unlikely bedfellows, Lufthansa is in discussions with AirBerlin’s main stake holder, Etihad, about the prospects of acquiring upwards of 40 aircraft and a majority of routes that are not operated in or out of AB’s hubs in Berlin and Duesseldorf. The acquisition would also include the crews for the aircraft.
Air Berlin currently operates 148 aircraft, so any acquisition would be a major one, since it would cut Air Berlin’s fleet by 27%. But this kind of a deal would also take the sting out of AB’s balance sheet which has hemorrhaged $1.29 BILLION in losses over the last 3 years.
The aircraft and routes would be assigned to Lufthansa’s Eurowings ‘Low Cost Carrier’ division and would immediately grow market share by eliminating the AB competition on the routes. This also plays well in Lufthansa’s plan that seeks to grow Eurowings by 25-30% in the coming year.
The one fly in the ointment will be the anti-trust fears that Germany and the EU will have. Historically, Germany and/or the EU have not looked favorably at deals that potentially reduce competition in the marketplace. But on the other hand, the real threat exists for the loss of thousands of jobs and the failure of an airline.
Not that the EU has made any good decisions lately, but here’s a chance for them to not screw something up! 😉
It would also be a welcomed jab at the ME3 who have been dumping capacity into Europe thanks to their subsidized operations, but I digress…….