Ryanair is to challenge a Lufthansa deal to buy parts of the failed German airline, Air Berlin, referring to the deal as a “stitch-up.”
Lufthansa plans to use Air Berlin's aircraft to expand its Eurowings budget airline business, a direct threat to the beleaguered Ryanair whose management says it will take the €210 million deal to the European competition authorities.
Air Berlin filed for bankruptcy in August 2017 after its main shareholder, Abu Dhabi-based Etihad, refused to throw more money at the problem. Air Berlin, which has been running up debts for nearly ten years, reported a record loss of €782m for 2016.
German Wings flights have continued, but only due to a ‘transitional loan’ of €150 million from the German government, while airline management have sought buyers for parts of the business.
Lufthansa has agreed to buy Air Berlin's Austrian leisure travel airline Niki, its LG Walter regional airline and 20 additional aircraft.
"We will be referring the matter to the EU competition authority in due course," says Ryanair whose management has been left reeling by the €20 million self-inflicted compensation liability it incurred after cancelling hundreds of flights due to the airline’s inability to sort out pilots’ holiday schedules..
Andreas Mundt, head of Germany's cartel office, said the European Commission would take a close look at the Lufthansa deal and that the German authorities will be following the process closely.
Lufthansa's chief executive Carsten Spohr said he expects the Air Berlin deal to gain European Union approval by the end of 2017.
Since late September, Air Berlin also has been negotiating with easyJet, which has yet to announce any deal but has the financial muscle to deliver a knock out offer.
Air Berlin’s long-haul flights now have ceased, any tickets dated later than November 1st will be invalid, but Niki and LGW should continue as normal while negotiations progress.
A well-priced deal with Air Berlin will allow Lufthansa to compete with low-cost carriers such as easyJet and Ryanair, both of which have taken large chunks of Lufthansa’s traditional share of short-haul European routes.
Lufthansa’s share price has risen sharply in recent weeks, boosted by an end to its pilots’ dispute over pay and conditions that had been disrupting services.
