Lufthansa to acquire majority of insolvent Air Berlin

12 October, 2017, 17:41 | Author: Valerie Burke
  • According to The Telegraph bankrupt airline carrier Air Berlin will end service on all its routes no later than October 28

News of the deal pushed Lufthansa shares up more than 3 percent to their highest level in almost 17 years. "But we can only really breathe again when the EU Commission approves the deal", Air Berlin Chief Executive Thomas Winkelmann said.

Lufthansa will pay around €210 million ($248 million) to buy 81 of Air Berlin's planes and take on 3,000 of its 8,500 employees, as well as take over Air Berlin's Austrian leisure travel airline Niki, and regional airline LG Walter.

Air Berlin declared itself insolvent on August 15 after losing financial support from its majority investor, Etihad Airways, and began negotiations with Lufthansa and the United Kingdom's easyJet, which were set to conclude on Thursday.

Britain's easyJet has a base in Schoenefeld airport in Berlin and has been negotiating the acquisition of between 27 and 30 aircraft, though one report earlier in the week said those talks might fail.

Lufthansa has spread its wings further, clinching a deal to buy up more than half of its bankrupt rival Air Berlin, in what its CEO Carsten Spohr described as "a milestone in the history of Lufthansa and Berlin". It made a loss of about 782 million euros previous year.

Shares in Lufthansa were up 2.9 percent at 25.27 euros (22.67 pounds), the top gained in Germany's DAX market index 0#.GDAXI by 0800 GMT after Spohr's comments and upbeat notes from brokerages.

Industry analysts in Europe said they raised ratings on shares of Lufthansa from market-perform to outperform, saying they believe a deal to acquire part of Air Berlin would add between €70 and €90 million in operating profits annually to Eurowings the budget unit of Lufthansa over the medium term.

HSBC analysts lifted their target share price to 29 euros from 25 euros, citing the imminent agreement with Air Berlin, a new multi-year labor deal with pilots announced this week and a positive trading performance this year.

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