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Lufthansa takes over large parts of Air Berlin

12 Oct 2017, 21:41 ( 12 Oct, 2017)

DF-Xinhua Report
File Photo Finavia.

German market leader Lufthansa signed an agreement to acquire the lion's share of the insolvent carrier Air Berlin on Thursday.

Lufthansa Chief Executive Officer (CEO) Carsten Spohr told press that it was a "big day" for his company which will gain an even tighter grip on Germany's commercial aviation industry by taking over large parts of its former rival.

Air Berlin employs around 8,000 staff and was the second largest German carrier until it declared insolvency in August. The budget airline subsequently received an emergency state credit facility of 150 million euros from Berlin to ensure its continued operations until a new owner was found.

Air Berlin's management has held exclusive negotiations over the bankrupt firm's sale with Lufthansa and Easyjet over the course of the past three weeks. Whether Easyjet will acquire the remaining share of Air Berlin's business still remains unclear.

Lufthansa CEO Spohr told the newspaper "Rheinische Post" on Thursday that his company was looking to take over 81 planes, 3,000 employees and invest 1.5 billion euros towards this end. Air Berlin previously voiced confidence that 80 percent of its workforce would be able to keep their jobs under new ownership.

While Lufthansa was widely anticipated to be successful with its bid for Air Berlin, its likely purchase of the bulk of the insolvent firm's assets has also prompted criticism in the aviation industry.

 Irish budget airline Ryan Air warned that Lufthansa increasingly resembled a monopoly in Germany. Consumers would pay the price if the already dominant airline were to additionally gain highly-prized assets such as Air Berlin's starting and landing rights at Berlin and Duesseldorf airports.  

Spohr rejected such concerns on Thursday, expressing the view in the "Rheinische Post" that competition was set to intensify both "in Europe and globally."

"We expect prices to continue falling," said Spohr, attributing the fall to internal competition between Lufthansa and its own budget airline Eurowings.

The Lufthansa CEO offered to repatriate Air Berlin customers stranded abroad at a "fair price," should his company have the necessary capacities. Air Berlin will cease operating all of its long-haul flights as of Oct. 15.

Air Berlin will further be unable to operate as an independent entity from Oct. 28 onwards, with tickets issued for later dates being cancelled. By contrast, the profitable Air Berlin subsidiaries Niki and LG Walter will continue to operate as normal.