Lufthansa ′to absorb Air Berlin′ | Business | Economy and finance news from a German perspective | DW | 19.12.2016

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Lufthansa 'to absorb Air Berlin'

On Sunday, Air Berlin's board fired CEO Stefan Pichler. Thomas Winkelmann is the new CEO. His mission: Complete the integration of debt-burdened Air Berlin into rival Lufthansa.

A report in Germany's leading business daily, "Handelsblatt," on Monday said that German federal and state governments had approved a plan for Germany's leading airline, Lufthansa, to take over the country's second-biggest, Air Berlin.

Thomas Winkelmann's appointment as Air Berlin's new CEO, who has been assigned the task of managing the integration of Air Berlin into Lufthansa, was decided by agreement between Lufthansa CEO Carsten Spohr and Etihad Airways CEO James Hogan. Etihad currently owns 30 percent of Air Berlin, and has been keeping the financially troubled German carrier flying by providing financing.

According to "Handelsblatt," Air Berlin's assets are to be split up. Lufthansa is already leasing 38 short- and medium-haul jets from Air Berlin. Now Air Berlin's Austrian subsidiary, Niki, will enter into a joint venture with holiday-destination carrier Tuifly. The remainder of Air Berlin's aircraft, including its long-haul jets, will soon be integrated into Lufthansa's fleet.

The publication of the story led to a boost in Air Berlin's shares on the stock exchange on Monday, with a rise of 6.8 percent in early trading in anticipation that the news could presage a takeover of the company by Lufthansa.

Governments and corporations in consensus

According to the report, the plan was developed in close coordination with the federal government in Berlin, with the support of state governments in Bavaria and North Rhine-Westphalia, which were intent on safeguarding Air Berlin's regional hubs at Munich and Düsseldorf.

"In view of Air Berlin's situation, the parties are unanimous in the view that the priority now is to strengthen Lufthansa," the "Handelsblatt" quotes an unnamed official at the Federal Transport Ministry as saying. Lufthansa has recently been plagued by a series of pilot strikes

Not yet resolved, however, is the question of who is to take on the burden of more than 1 billion euros of debt attached to Air Berlin. Lufthansa's position is that the legacy debt is not its problem.

nz/tj (Handelsblatt, Reuters)