Tuesday June 23, 2009
FRANKFURT: Lufthansa made headway on Monday on wrapping up its acquisitions of Brussels Airlines and BMI British Midland after it addressed competition concerns voiced by the European Commission. The German flagship carrier obtained permission from EU antitrust authorities to buy Brussels Airlines in a deal worth up to 250 million euros ($347 million) after it agreed to let rivals fly on some of its routes.
Lufthansa will allow new entrants to operate flights from Brussels to Frankfurt, Munich, Hamburg and Zurich. The acquisition will boost Lufthansa's network and give it more premium travellers.
Airlines around the world are looking to merge with or acquire rivals to boost scale and tap into growth regions following falling demand due to the global economic crisis. The world's carriers are expected to lose $9 billion this year, industry body International Air Transport Association said earlier this month, nearly doubling its earlier estimate of $4.7 billion. Lufthansa also said on Monday it has struck a deal with Sir Michael Bishop to acquire his stake of 50 percent plus one share in BMI via holding company LHBD.
LHBD, which is 35 percent-owned by Lufthansa, will buy the stake for around 48 million pounds ($79.1 million) on July 1. In addition, Lufthansa will pay Bishop 175 million pounds to cancel options forcing Lufthansa to buy the stake itself. Those two sums together are considerably less than the 400 million euros media had previously reported that Lufthansa had earmarked for the purchase.
The deal will help Lufthansa expand its presence at Britain's Heathrow airport, where BMI controls more than 11 percent of all the take-off and landing slots. Lufthansa already had a 30 percent minus one share stake in BMI, while Scandinavian airline SAS has 20 percent. "Like we have said before, we want to make an exit," a spokesman for SAS said, adding the company was still in discussions with Lufthansa. "We have awaited news around Bishop and Lufthansa, and I don't think we're going to have any more to say on the topic until that transaction is finished."
Lufthansa said earlier this year it was considering various options for BMI, which ranged from continuing the carrier's operations as they are to selling the company. Media had also speculated Lufthansa could sell BMI's Heathrow slots. The EU Commission, which already cleared Lufthansa's take-over of BMI last month, is now looking into its proposed buy of loss-making Austrian Airlines, with the deadline for that review set for July 1.
(Reuters)
FRANKFURT: Lufthansa made headway on Monday on wrapping up its acquisitions of Brussels Airlines and BMI British Midland after it addressed competition concerns voiced by the European Commission. The German flagship carrier obtained permission from EU antitrust authorities to buy Brussels Airlines in a deal worth up to 250 million euros ($347 million) after it agreed to let rivals fly on some of its routes.
Lufthansa will allow new entrants to operate flights from Brussels to Frankfurt, Munich, Hamburg and Zurich. The acquisition will boost Lufthansa's network and give it more premium travellers.
Airlines around the world are looking to merge with or acquire rivals to boost scale and tap into growth regions following falling demand due to the global economic crisis. The world's carriers are expected to lose $9 billion this year, industry body International Air Transport Association said earlier this month, nearly doubling its earlier estimate of $4.7 billion. Lufthansa also said on Monday it has struck a deal with Sir Michael Bishop to acquire his stake of 50 percent plus one share in BMI via holding company LHBD.
LHBD, which is 35 percent-owned by Lufthansa, will buy the stake for around 48 million pounds ($79.1 million) on July 1. In addition, Lufthansa will pay Bishop 175 million pounds to cancel options forcing Lufthansa to buy the stake itself. Those two sums together are considerably less than the 400 million euros media had previously reported that Lufthansa had earmarked for the purchase.
The deal will help Lufthansa expand its presence at Britain's Heathrow airport, where BMI controls more than 11 percent of all the take-off and landing slots. Lufthansa already had a 30 percent minus one share stake in BMI, while Scandinavian airline SAS has 20 percent. "Like we have said before, we want to make an exit," a spokesman for SAS said, adding the company was still in discussions with Lufthansa. "We have awaited news around Bishop and Lufthansa, and I don't think we're going to have any more to say on the topic until that transaction is finished."
Lufthansa said earlier this year it was considering various options for BMI, which ranged from continuing the carrier's operations as they are to selling the company. Media had also speculated Lufthansa could sell BMI's Heathrow slots. The EU Commission, which already cleared Lufthansa's take-over of BMI last month, is now looking into its proposed buy of loss-making Austrian Airlines, with the deadline for that review set for July 1.
(Reuters)
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