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Germany's Lufthansa looking to buy majority of Air Berlin planes

[BERLIN] Germany's Lufthansa is considering buying a majority of insolvent Air Berlin's aircraft, two people familiar with the matter said, as the government and rivals race to carve it up.

Air Berlin, Germany's second-largest airline, filed for bankruptcy protection on Tuesday after shareholder Etihad Airways withdrew funding following years of losses.

The insolvency comes as many Germans enjoy summer holidays, and just ahead of a September general election, both factors which have put pressure on the German government to help minimise travel disruptions and job losses.

Transport Minister Alexander Dobrindt backed Lufthansa to buy a major portion of Air Berlin's assets, saying Germany needed a "national champion" in international aviation. "That is why it is urgently necessary that Lufthansa can take over significant parts of Air Berlin," he told daily newspaper Rheinische Post.

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Berlin has granted a bridging loan of 150 million euros (S$240.47 million) that will keep Air Berlin's planes in the air for up to three months, bringing holidaymakers home and securing 7,200 jobs in Germany while buyers for its assets are found.

Air Berlin's demise offers Lufthansa and rivals a chance to acquire slots at airports such as Berlin Tegel and Duesseldorf, with Germany's largest airline keen to defend its domestic position against low-cost rival Ryanair.

One scenario Lufthansa's Chief Executive Carsten Spohr has presented to the flagship carrier's supervisory board is that it could take on as many as 90 of Air Berlin's roughly 140 planes, all of which are leased, one of the people said on Thursday.

That would include the 38 aircraft that Lufthansa is already leasing from Air Berlin and its Niki division.

"These are ideas that Lufthansa is bringing into the talks,"the source said, adding that no decisions had been made yet and that it was ultimately up to Air Berlin's administrator.

The other source said the number of aircraft that Lufthansa could take on was lower than 90.

The Sueddeutsche Zeitung newspaper earlier cited company sources as saying that Lufthansa CEO Spohr was due to hold talks with Air Berlin's administrator and its management on Friday. Lufthansa declined to comment on the matter.

Air Berlin itself has said it is in talks with three aviation firms and aims to strike deals with at least two of them by the end of September.

RedaktionsNetzwerk Deutschland (RND), a group which represents German newspapers, cited government sources as saying that Lufthansa, its budget carrier Eurowings and Thomas Cook's German airline Condor would likely snap up Air Berlin's most valuable landing slots.

A source has said easyJet was also part of the negotiations.

RND said a few slots could also go to Ryanair, which has filed a complaint with German and European Union competition authorities over the insolvency process, which its chief executive describes as a "conspiracy".

Germany faces allegations by the European Commission of maintaining a cosy relationship with its domestic industry and questions about whether authorities did enough to uncover an emissions scandal at carmaker Volkswagen, which is partially state-owned.

REUTERS

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