Lufthansa Prepares to Buy Parts of Air Berlin in $1.8 Billion Deal

Germany's Lufthansa to buy Air Berlin assets

Lufthansa plans to use the Air Berlin assets to quickly expand its Eurowings budget business.

Lufthansa Chairman and CEO Carsten Spohr said the giant would sign the deal, which would mean the acquisition of parts of Air Berlin, including 81 aircraft and 3,000 employees, for a price tag of 1.5 billion euros ($1.78 billion), Efe news reported.

A person who is familiar with the ongoing situation said Wednesday that Lufthansa, the largest airline in Germany, was going to acquire the Niki, the Austrian leisure travel line of Air Berlin, its regional airline LG Walter, and also some other aircraft that were short-haul.

"This contract provides new opportunities for jobs for a large part of our workforce".

"We will only be able to breathe when the Commission has finally confirmed the transaction", Air Berlin boss Thomas Winkelmann said in the company's statement.

Ryanair previously described the negotiations as a "stitch-up" meant to strengthen Lufthansa.

Andreas Mundt, head of Germany's cartel office, said the European Commission would take a close look at the deal and that German authorities would follow the process closely.

"The negotiations are still underway with easyjet", Air Berlin said in a special sales meeting with Lufthansa and British airline EasyJet since 25 September 2017.

EasyJet declined to comment on the progress of talks on Thursday.

Lufthansa has yet to say how much it will pay under the deal, but Spohr told newspaper Rheinische Post today that the group would invest 1.5 billion euros (USD 1.8 billion) in its low-priced subsidiary Eurowings following the takeover.

Air Berlin, the second largest carrier in Germany, will end all operation of its flights during October, capping a tumultuous summer for carriers in Europe.

The group's finance chief Ulrik Svensson had said in August that Lufthansa was interested in helping to shape the Italian aviation market but was not willing to take over the struggling national carrier in its current shape.

Shares in Lufthansa rose 2.8% in Frankfurt.

Analysts at Bernstein Research raised their rating on Lufthansa's shares to "outperform" from "market-perform", saying they expected a deal with Air Berlin to add around 70 to 90 million euros to annual operating profits at Eurowings in the medium term.

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