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Lufthansa in talks with Etihad to buy parts of AB business

Lufthansa in talks with Etihad to buy parts of AB business

Old Jul 20, 16, 6:07 am
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Lufthansa in talks with Etihad to buy parts of AB business

Regarding to german daily paper Handelsblatt LH is in talks with EY to buy all AB routes that are not touching DUS or BER/TXL. Due to web service aero.de, AB is not participating in the talks between LH and EY.

Handelsblatt further comments that this might include 40 leased planes out of AB's 140 planes fleet, including staff and routes.

EY seems to be not interested in the touristic (non-Hub) Business of AB.

LH would integrate this business into their Eurowings platform.

Talks should be concluded untill October.

Actual figures: negative capital at AB group end of 2015: -799 M € . Debt as of the same date: 878 M € . Cashflow -447 M € . EY is holding 29.21% of AB's shares, 58.77% are free float, 12.02 % are held by ESAS Holding.
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Old Jul 20, 16, 6:14 am
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Analysts are adding, why LH might be interested in that deal:

- to show, that the EW platform is working
- to grow EW without cost for aquiring own planes - while reducing competition
- the deal would end crew and pilots shortage at LH group
- LH fears that with AB going bancrupt, Ryanair would quickly accomodate in the german market to fill AB's routes and bring fierce competition
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Old Jul 20, 16, 1:27 pm
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Not sure about anti-trust; Eurowings/LH would receive an extraordinary position.
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Old Jul 21, 16, 12:40 am
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Given the recent decision in the Edeka/Tengelmann deal I have strong doubt that they would gain antitrust clearance on the German level not to speak about the EU level. LH (without counting LX/OS) being the No 1 in Europe considering mileage * pax, AB is the No. 10. With forces united they would reach the strength of KLM and AF together (still without OS/LX)....
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Old Jul 21, 16, 7:54 am
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Lufthansa in talks with Etihad to buy parts of AB business
What is meant by the verb "buy".
What is left that AB could sell? Leased planes?
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Old Jul 21, 16, 9:54 am
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Originally Posted by warakorn View Post
What is meant by the verb "buy".
What is left that AB could sell? Leased planes?
Obviously an asset that is the most valuable asset LH might ever buy: The one and only competitor in the German market.
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Old Jul 22, 16, 2:34 am
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Originally Posted by warakorn View Post
What is meant by the verb "buy".
What is left that AB could sell? Leased planes?
Good question - Biztravel, the german web-portal of travel industry specialist fvw states:

"Wie die fvw aus dem Umfeld der Lufthansa erfuhr, verhandelt der Lufthansa-Konzern in Frankfurt mit Etihad Airways auf einem absoluten „Top Secret Level“ darüber, den dezentralen Verkehr von Air Berlin an den Lufthansa-Konzern zu veräußern. Die Lufthansa wolle damit das Streckennetz ihrer Low-Cost-Tochter Eurowings ausbauen. Konkret handelt es sich bei den Verhandlungen um alle Air-Berlin-Routen, die nicht die Air-Berlin-Drehkreuze Düsseldorf und Berlin berühren."

roughly translated as follows: LH and EY having top secret talks about selling all non-hub routes (routes not touching DUS or BER) of AB. Those are to be integrated into the EW network.

Other media are also reporting that 40 leased planes and crew/pilots are to be sold. Not sure how this should work out technically.
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Old Jul 22, 16, 2:39 am
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Obviously not so top secret!
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Old Jul 22, 16, 7:37 am
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Other media are also reporting that 40 leased planes and crew/pilots are to be sold. Not sure how this should work out technically.
What value would these non-TXL and non-DUS Air Berlin routes have?
I think it is pretty minimal.
EW could lease themselves planes and start these routes right away.
The only reason to pay would be (as Flying Lawyer pointed out) to get the competitor out of his way.
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Old Jul 25, 16, 3:46 am
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Originally Posted by warakorn View Post
EW could lease themselves planes and start these routes right away.
As can Ryanair
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Old Jul 25, 16, 4:19 am
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Looking at the shortage of crews OS is currently having - LH and LX are already helping out - I don't think that planes are the main issue. Crews seem to be more of a problem. That seems to be the reason why crews are part of the discussion.
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Old Jul 26, 16, 1:09 am
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So I assume that anybody who books an airberlin/NIKI (revenue or redemption) flight expecting to have status perks and lounge access might be in for an unpleasant surprise when the flight gets changed to Eurowings. Nice!
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Old Jul 26, 16, 1:58 am
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Specially as Eurowing is not a member of Star Alliance.
If you have status with LH then you are fine, but you have Gold with A3 or TK, I reckon there are 0 benefits on Euro/Germanwings
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Old Jul 26, 16, 2:09 am
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Exactly. Lufty is not exactly known for its generosity!
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Old Jul 26, 16, 5:05 am
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Originally Posted by Flying Lawyer View Post
Given the recent decision in the Edeka/Tengelmann deal I have strong doubt that they would gain antitrust clearance on the German level not to speak about the EU level. LH (without counting LX/OS) being the No 1 in Europe considering mileage * pax, AB is the No. 10. With forces united they would reach the strength of KLM and AF together (still without OS/LX)....
I can only hope that regulators stop Lufthansa from dominating even more of the European skies than it already does, but I'm not betting on regulators to squash the entirety of a deal that lets LH get some piece of AB.
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