Lufthansa has offered concessions to ease EU concerns about its plan to buy Air Berlin assets, aiming to avert a collapse of the deal that could unravel the insolvent carrier’s carve-up.
The European Commission, which is concerned about Lufthansa’s potential dominance in Germany as a result of the plan, said yesterday it had extended its deadline for a decision on the deal to December 21 from December 7.
Air Berlin filed for insolvency in August and was subsequently carved up, with Lufthansa buying Niki and LG Walter (LGW), plus some short-haul planes, for €210mn ($249mn) to expand its Eurowings budget brand.
Britain’s easyJet is taking on some Air Berlin operations at Berlin’s Tegel airport.
However, the Lufthansa deal has come under fire from airlines and consumer groups who fear it will give Germany’s flagship carrier dominance of German domestic routes and in Austria.
The EU Commission did not provide details of Lufthansa’s proposal, but it had previously determined that Lufthansa, Niki and LGW’s activities overlap on more than 100 routes, which means that remedies would have to be significant.
A source familiar with the matter told Reuters on Thursday that the airline was willing to cede slots belonging to Air Berlin businesses Niki and LGW.
If the EU launches an in-depth probe of the deal, pushing any approval well into 2018, the whole transaction could be called off as Lufthansa has said its financial planning only anticipated pumping money into the ex-Air Berlin flight operations until the end of this year.
That also calls into question whether and how the German government will be repaid a €150mn ($178mn) loan it granted to Air Berlin when the carrier filed for insolvency, to prevent its planes from immediately being grounded. “Of course we still expect that the loan will be repaid,” a spokesman for the German economy ministry said yesterday.
It is also unclear whether Austria’s government would still stand ready to provide bridge loans to Austrian unit Niki if necessary, following parliamentary elections in October that are set to bring a change in government.
The chief of Niki’s workers’ council, Stefan Tankovits, told Oe1 radio yesterday it was hard to tell whether the offer of a government loan still stood.
Austria’s chancellery and infrastructure ministry said the preference was to save jobs but both ministers, who hail from the outgoing Social Democrats, have limited influence on future decisions.
The conservative-controlled finance ministry and the Freedom Party, which is likely to enter government with the conservatives, had no immediate comment.
Former motor racing driver Niki Lauda, who founded the Niki business, and Thomas Cook’s airline Condor had offered around €100mn to buy Niki plus 17 aircraft.
British Airways owner IAG had also made a bid for the unit.
Both Thomas Cook and IAG have declined to comment on whether they are still interested in Niki.
An aircraft operated by Lufthansa takes off alongside a tailfin displaying the company’s logo at Frankfurt airport. The EU Commission did not provide details of Lufthansa’s concession proposal, but it had previously determined that Lufthansa, Niki and LGW’s activities overlap on more than 100 routes, which means that remedies would have to be significant.
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
US, Canada, Mexico sign trade deal; Trump shrugs off hurdle in US Congress
Golf-cart-size cars hit road for market that may not even exist
Global markets tread water before Trump-Xi meeting
Bulgaria prepares to transport Russian gas to central Europe
Top German car officials finalising White House meeting next week
Unilever CEO retires after headquarters row, replaced by insider Jope
SoftBank becomes first Japanese company to forgo IPO price range
Fed is likely to raise rates in Dec but concerns mounting
India’s economic growth slows as Modi prepares for re-election