Lufthansa Allegedly Wants To Take Over Airberlin’s Longhaul Routes

Airberlin filed for insolvency a couple of weeks ago after Etihad withdrew financial support, and now they’re continuing to operate with an emergency loan of 150 million Euros. They’re burning through that cash pretty quickly, and it’s clear that they don’t have a future as an independent airline.

This morning we learned that airberlin plans to cut most of their longhaul routes out of Berlin in the next month or so, as they’re canceling flights to Abu Dhabi, Chicago, Los Angeles, Miami, New York, and San Francisco. For the time being they’ll continue to operate some longhaul flights out of Dusseldorf (which is their biggest hub), though I imagine their days are numbered out of there as well.

The way things are set up right now, bidders are able to submit offers for airberlin’s assets (mostly planes and airport slots) through mid-September. Apparently there’s interest in various parts of airberlin’s operations from Lufthansa, Thomas Cook, EasyJet, Ryanair, etc.

Reuters is reporting that Lufthansa allegedly wants to take over about a dozen of airberlin’s longhaul aircraft, and continue to operate some of their longhaul flights out of Berlin, including to New York. According to the story:

Lufthansa, which currently does not offer long-haul flights from Berlin, is especially interested in the carrier’s routes to U.S. cities including New York, the source said on Tuesday.

Lufthansa, which has the German government’s backing to take over major parts of Air Berlin, could acquire as many as 90 of its planes, including 38 aircraft it is already leasing from the airline and its leisure unit Niki, another source told Reuters this month.

Such a deal, seen valued in the low hundreds of millions of euros, could see up to 3,000 of Air Berlin’s workers move to Lufthansa, the person familiar with the matter said on Tuesday.

As mentioned above, keep in mind that Lufthansa is already leasing a few dozen planes from airberlin. You don’t often see a country’s largest airline wanting so desperately to help out a country’s second largest airline, though the power play is quite obvious here. Lufthansa wants to keep EasyJet and Ryanair out of Germany as much as possible, as that poses the biggest threat to their shorthaul routes. So this was a case of “the enemy of my enemy is my friend.”

It would be great to see Lufthansa take over airberlin’s longhaul routes, especially since it would mean that several thousand airberlin workers would be employed. My guess is that if Lufthansa actually starts longhaul flights out of Berlin, it would be part of their Eurowings division, which is their low cost carrier. That seems like the best fit for a market like Berlin, which has a lot of demand, but also isn’t an especially high yield market.

For now this is still very much developing, though by mid-September we should have a better sense of the fate of airberlin’s fleet and routes.

Comments

  1. The A332s fit nicely into Eurowings fleet. Berlin’s market yield will increase quite a bit once (if?) the new Berlin-Brandenburg airport (ever) opens.

  2. I wonder how those exchanged gates and routed and such will transfer over once BER eventually closes Tegel and Schönefeld. If that ever happens…

  3. I’m afraid this whole deal reeks of collusion. LH is getting a bargain at the expense of the German taxpayer. Is anyone seriously telling me if there wasn’t a big election coming up that this would still happen? Something isn’t right here. I hope I’m wrong on this, but this just seems to me like one big set up.

  4. As far as I know, Lufthansa was anyway going to make Berlin a new hub and start operating long-haul once the new airport opens.

  5. OneWorld is already the weakest airline alliance for European travelers and this latest Air Berlin situation is a further erosion in that market. Buying those routes makes sense for LH but is bad for OneWorld members.

  6. @Lucky so you think it is great if Lufthansa is the only German network carrier then? I think for everyone paying for the tickets it will be horrible given the already high prices that will only go up with less competition, not to mention the even more poor connectivity from most German cities (except FRA/MUC) after airberlin is gone.

    The people working today for airberlin would find another job in the industry anyway, some immediately, some soon, some later. Germany likes the argument to “save” jobs at any cost, they do it for airlines, grocery stores, etc. and it is always plain stupid as it results in still less jobs (you think Lufthansa will keep all the operational staff that they have themselves already? Why would they, it is not a charity… a new airline or a smaller one expanding would tho…), less competition and higher prices.

  7. Germany has a long history of having pretty much any major airline that isn’t Lufthansa fail.

    The only one that hasn’t is Condor and it was part of Lufthansa for a pretty long time (in airline years, at least).

    For years, LTU struggled to find a niche. Then they themselves were bought out by airBerlin.

    The rest of the market is all tiny leisure players like Germania and specialist carriers like Sylt Air, offering flights to German islands and the like.

    Certainly, Lufthansa is a well-run airline that doesn’t leave a lot of open flanks for competitors to attack, but I’m also sure German regulators help ensure Lufthansa’s position as well, even if they’re not consciously doing so.

  8. I really wish Lufthansa would take over some of Airberlin’s routes out of Dusseldorf, even if it is under the Eurowings brand. I remember Lufthansa having a small long-haul hub out of Dusseldorf which slowly started diminishing around 2012. At one point they flew from DUS to YYZ, ORD, EWR (the only long-haul route going today) and MIA and apparently there were rumors that LH was going to start DUS-NRT or some other Asian route. I don’t know why they decided to suddenly stop flying out of DUS long-haul, with the exception of EWR. The YYZ-DUS flight was usually always packed. With a lot of family of mine living in the DUS region, it was nice to fly the YYZ-DUS route on LH, now I usually fly YYZ-FRA and drive up to the Dusseldorf area.

    I know Airberlin was going to start a YYZ-DUS route sometime next year, but given that they will go out of business soon, I hope either LH or Eurowings picks that route up. I think DUS would make a great and better hub for Eurowings than Berlin, given that the region around Dusseldorf is so densely populated with many other big cities. The Rhine-Ruhr area has a population of over 11 million people, compared to the Berlin-Brandenburg area with about 6 million people. I also think a Eurowings hub out of DUS would do better than out of CGN, given that DUS already has the availability and capacity for long-haul operations thanks to Airberlin.

  9. I think the more interesting news of the day is that Germania has sued the German government on the guarantee issued for the 150m loan to AB. The (district) court decision is apparently scheduled for September 15. It argues that the guarantee was issued to assure a smooth take over by LH and should be suspended until the EU anti trust authority authorizes it …

    I would not be surprised if others contesting the LH bid, such as Ryanair, Easyjet, Mr. Wöhrl and Mr. Lauda join this legal action. Even IAG and AFKL might join at very low risk.

    Now if this gets approved by the court, depending on how much of the loan has been paid out, this could bring AB operations into precarious situation much earlier than expected … I dont’ know the payment schedule, but based on what I read it coud be 50m per month, because that’s monthly payment EY made before.

  10. I think the competition regulators (German and EU) should be taking a long, hard look at the cozy arrangements LH is getting with buying parts of Air Berlin here. This reeks of collusion to prevent competition. And the US government should take a look at any slots Air Berlin has at slot-restricted airports as well.

  11. @CraigTPA EU only cares about competition if it means they get to extort money from US companies. When it’s one of their own, and state supported, then fat chance that the EU bats an eye.

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