Lufthansa confirmed that it will purchase more than half of rival Air Berlin

The largest airline in Germany Lufthansa will purchase units of second-largest airline Air Berlin that is worth more than 249 million dollars after filing for insolvency last August.

Last October 12 (Thursday), Air Berlin confirmed that Lufthansa would buy its regional carrier Luftfahrtgesellschaft Walter mbH (LGW), more than 20 aircrafts, and its Australian holiday airline Niki Luftfahrt. According to the people close to the airline, the transaction roughly costs 210 million euros, but Lufthansa didn’t release an official statement regarding the total cost.

German airline executive Carsten Spohr confirmed in the newspaper Rheinische Post that Lufthansa would hire as much as 3,000 employees from Air Berlin as a part of its investment worth 1.5 billion euros, adding that the people would soon witness a “milestone in the history of Lufthansa and Air Berlin”.

Chief executive of Air Berlin Thomas Winkelmann said that this is a huge step forward, but they cannot relax until the EU-Commission completes the entire transaction. The negotiations between British budget airline easyJet and other bidders of Air Berlin is still in progress, which easyJet declines to comment about.

Meanwhile, Irish low-cost airline Ryanair, which is one of the many who raised concerns regarding the news that Lufthansa took over the share of the assets of Air Berlin, said it would address the subject in due course of the EU competition authority. This deal was already approved the day before by the supervisory board of Air Berlin. Ryanair also canceled several flights due to poor handling on the pilots’ vacation leave.

For the past six months, three carriers have filed insolvency following the short-haul market competition in Europe that has placed weak carriers under pressure.

Air Berlin is just one out of the many air carriers in Europe that has been struggling lately. More than thousands of passengers were terrified the moment Air Berlin filed for insolvency last August. This was after UAE-based airline Etihad Airways decided to stop financially supporting, considering that it is Air Berlin’s biggest shareholder.

Etihad gave a lot of cash injections to the airline for more than six years to keep it out of difficulty. Meanwhile, the Federal government offered Air Berlin a bridging loan worth 150 million euros that has somehow supported it throughout the summer, same uncertainty experienced by Monarch Airlines.

A week before the Lufthansa-Air Berlin agreement, Monarch was the latest airline to subside. However,  the loan provided by the government could possibly be repaid, according to Düsseldorf-based lawyer Frank Kebekus.

 

The fleet would have been well balanced on August 12-13 without the load and might result in a loss of employment for all employees, according to Winkelmann. Jobs at LGW and Niki are already secured and the future of other employees of Air Berlin is bright.

 

 

 

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