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The die is cast: Lufthansa buys large chunks of Air Berlin


Lufthansa and Air Berlin signed a €1.5 billion euro purchase agreement for the large parts of the troubled carrier, Lufthansa CEO Carsten Spohr announced on Thursday in Berlin, Berliner Zeitung reports.

The management of Air Berlin negotiated the sale of parts of the company for three weeks with the German market leader Lufthansa and with the British low-cost airline EasyJet. The Irish low-cost carrier Ryanair had pulled out of the bidding earlier accusing the German government and Lufthansa of a conspiracy

Lufthansa would "take over 81 aircraft from Air Berlin, hire 3000 employees and invest a total of €1.5 billion euro," Spohr told the Rheinische Post. Separately, Air Berlin announced that about 8000 employees amounting to around 80% of its workforce have “good chances” of getting jobs at other companies.

Spohr denied the claim Ryanair’s claims that Lufthansa’s victory in bidding for Air Berlin would cause a jump up in ticket prices. "The competition will intensify in Europe and worldwide. We are assuming further declining prices," he told the newspaper. "Since there were only Lufthansa and Air Berlin so far, as between Munich and Cologne, for example, Eurowings flights now come as a substitute for Air Berlin."

Air Berlin had filed for insolvency in the middle of August, 2017. Since then, its flight operations were only secured by a federal loan by German government of over €150 million. They will be stopped in full at the end of October, 2017, except for the flights by Air Berlin’s brands Niki and Luftverkehrsgesellschaft Walter (LGW) that, at least for now, will continue.

Air Berlin, Germany’s second-largest airline, was coping with considerable financial difficulties in the past time. However, it was only after its main shareholder Etihad withdrew its financial support, Air Berlin filed for insolvency on August 15. The move was supported by both the German government, which agreed to provide €150 million of State Aid to keep it afloat, as well as Germany’s main carrier Lufthansa, which is considered to be the first in line to take parts of the business.

Lufthansa Group owns Austrian Airlines, Swiss Airlines, Eurowings and Brussels Airlines, as well as a share in the Turkish SunExpress. In addition, the group includes logistics, technical and service companies.

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