ota1
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Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Thu Dec 22, 2016 3:34 pm

According to usually very well informed magazine "Der Spiegel" Etihad Airways might take a 10% stake in Lufthansa, In return they would take liability for Air Berlin's debts and hand over their stake in Air Berlin to Lufthansa. A similar deal could be forged to hand over Etihad's stake in Alitalia, that would see Etihad even increasing their stake in Lufthansa.

http://www.spiegel.de/wirtschaft/unternehmen/etihad-will-air-berlin-anteile-in-lufthansa-beteiligung-tauschen-a-1127146.html
sorry source in German
 
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OA940
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Thu Dec 22, 2016 4:20 pm

So will AB vanish? Or will it be a 100% LH owned airline? And certainly Alitalia won't be merged with a foreign carrier.
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VSMUT
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Thu Dec 22, 2016 5:05 pm

I just cant see this happening. What are the chances that the EU would allow LH to take over AB, and possibly even Alitalia? IMHO, Air Berlin maybe, but surely not Alitalia...
 
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PerfectGriffin
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Thu Dec 22, 2016 5:09 pm

That would be one of EY's smarter decisions if it goes through. EY should have never invested AB or AZ.
 
PanHAM
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Thu Dec 22, 2016 5:28 pm

LOL, how gracious, "they take liability of Air Berlins debt". It's their bloody Obligation to do that, they have been responsible. WTH should LH or any other potential buyer take over debt for which they are not responsible.

The deal can only be that EY and the other owners asume their responsibilities and that LH pays a price which must be negotiated and reflect the true value of AB. If, on top of that EY want's to buy a 10% share of LH, fine. But at the current value that would be more than500 mio € without Goodwill. With Goodwill I guess LH can ask for twice that sum. The catch is, 40% of the LH stock is already owned by non EU personal and corporate citizens. 45% foreign ownership is the next thrshold where the Company has to offer new Shares in order to dilute the foreign ownership.

In simple words, LH can sit down, smile and listen, EY is the onbe that has to make the concessions.
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enilria
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Thu Dec 22, 2016 6:32 pm

Why would LH (or anybody) want AZ? I assume that would finally end the DL/AZ JV.
 
Waterbomber
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Thu Dec 22, 2016 6:50 pm

LH and AB should never be allowed to merge. If the EU pass this, the competition authorities should be put in jail for corruption.
Also, LH Passage nor EW are very profitable enterprises. They would be shooting themselves in the face if they do take-over AB entirely.
The EU should intervene and protect the consumers and also LH, as LH's management don't know what they are doing at the moment.
EY said that they can turn AB around. So let them put their money where their mouth is until the very last cent.
If it goes bankrupt, let EY be liable for all their debts and obligations. If mismanagement can be proven, they can't hide behind the corporate limited liability status anymore.
That'll teach them a very good lesson.

As for AZ... the Italians have clearly taken EY for a ride.
It's the case of the fisherman who thought that he was catching a fish, but ended up being eaten by the fish.
 
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Thu Dec 22, 2016 6:53 pm

Waterbomber wrote:
LH and AB should never be allowed to merge. If the EU pass this, the competition authorities should be put in jail for corruption.
Also, LH Passage nor EW are very profitable enterprises. They would be shooting themselves in the face if they do take-over AB entirely.
The EU should intervene and protect the consumers and also LH, as LH's management don't know what they are doing at the moment.
EY said that they can turn AB around. So let them put their money where their mouth is until the very last cent.
If it goes bankrupt, let EY be liable for all their debts and obligations. If mismanagement can be proven, they can't hide behind the corporate limited liability status anymore.
That'll teach them a very good lesson.

As for AZ... the Italians have clearly taken EY for a ride.
It's the case of the fisherman who thought that he was catching a fish, but ended up being eaten by the fish.


Why? There are plenty of other airline options in Europe. Too many probably.
"PPRuNe will no longer allow discussions regarding Etihad Airlines, its employees, executives, agents, or other representatives. Such threads will be deleted." - ME3 thug airlines suing anyone who brings negative information public..
 
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VCEflyboy
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Thu Dec 22, 2016 6:58 pm

Yes I agree. I doubt the LH stake is going to happen. Surely they are warming up relations but I don't see LH taking in liability for AB.
 
LGAviation
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Thu Dec 22, 2016 7:05 pm

An AB deal makes sense from LH perspective in order to further grow their EW network, alhtough I am a little concerned that the complexity of EW with hubs in BRU/DUS/CGN/TXL might be too much given the various AOCs involved. I am not entirely sure that AB would be a perfect fit for EW but the experiment of also offering routes to JFK, MIA and LAX on the EW basis might be worth it.
I don't really see the same competition law constraints that some of us here are seeing and am coming from a German law legal background, on domestic routes quite frequently there already is a monopoly that is only in competiton with our rather potent rail service. Also, looking at the counterfactual of the two not merging, there would not be more competition since AB would go down the pipe altogether. Things would only change if there was another offer from say IAG but that is not on the table as of now.
The price to be paid obviously is a premiership with EY which I doubt will be useful for LH given their strong presence in Eastern markets. With the LH-TG/SQ partnerships there's also no need for a partnership to Australia.

AZ would be a totally different case though and I just hope that they don't touch it and instead grow EN or EW in italy.
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LHRFlyer
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Thu Dec 22, 2016 7:20 pm

There's not a chance of EY getting a 10% stake in LH.

They will have to offer hundreds of millions of Euros in cash and guarantees to offload AB on to LH.
 
Waterbomber
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Thu Dec 22, 2016 7:36 pm

I don't really see the same competition law constraints that some of us here are seeing and am coming from a German law legal background, on domestic routes quite frequently there already is a monopoly that is only in competiton with our rather potent rail service. Also, looking at the counterfactual of the two not merging, there would not be more competition since AB would go down the pipe altogether.


I personally don't think that competition on the domestic market is something that the EU should rule upon.
The issue is that AB and LH merger will give rise to a huge competition issue for Germany on in and outbound international travel.
If the EU allow them to merge, in theory the next day LH could cancel all AB flights and force all air travel through their existing hubs at higher fares.
The German international travel market is too big to be allowed to be managed by one airline.

If AB goes bankrupt, new entrants can come in and compete for LH's clientele. LH would have to grow organically, ie much slower, to absorb AB's market share.
It's one thing to be handed over aircraft and crews in a running operation, it's a totally different when you have to go out to look for aircraft, induct them, hire crews, etc...
Also, there is the customer and operational database which is worth gold. If LH gets those handed over, new entrants have no chance of competing against them for ex AB customers.

There is the matter of staff lay-offs in bankruptcies. Other airlines have been allowed to fail in the name of preserving fair competition despite that it resulted in social bloodbaths. So why not AB?
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Thu Dec 22, 2016 7:40 pm

LGAviation wrote:
An AB deal makes sense from LH perspective in order to further grow their EW network, alhtough I am a little concerned that the complexity of EW with hubs in BRU/DUS/CGN/TXL might be too much given the various AOCs involved. I am not entirely sure that AB would be a perfect fit for EW but the experiment of also offering routes to JFK, MIA and LAX on the EW basis might be worth it.
I don't really see the same competition law constraints that some of us here are seeing and am coming from a German law legal background, on domestic routes quite frequently there already is a monopoly that is only in competiton with our rather potent rail service. Also, looking at the counterfactual of the two not merging, there would not be more competition since AB would go down the pipe altogether. Things would only change if there was another offer from say IAG but that is not on the table as of now.
The price to be paid obviously is a premiership with EY which I doubt will be useful for LH given their strong presence in Eastern markets. With the LH-TG/SQ partnerships there's also no need for a partnership to Australia.

AZ would be a totally different case though and I just hope that they don't touch it and instead grow EN or EW in italy.


While I do not see anyone is taking over AZ soon I agree with you about AB.

With FR continuing to expand on routes within Germany, U2, ST, HV and all the others around there are enough possible competitors in case there would be any legal requirements for giving up any routes or slots.

Furthermore lets not forget that within the last three years Germany was well covered by long distance bus services.
Last edited by SQ22 on Thu Dec 22, 2016 7:40 pm, edited 1 time in total.
Reason: Updated for clarification
 
lancelot07
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Thu Dec 22, 2016 9:06 pm

Waterbomber wrote:
EY said that they can turn AB around. So let them put their money where their mouth is until the very last cent.
If it goes bankrupt, let EY be liable for all their debts and obligations. If mismanagement can be proven, they can't hide behind the corporate limited liability status anymore.

EY is not liable for AB's debt beyond losing its investment in AB in case of a bankruptcy, including its loans to AB.
Mismanagement by EY can be ruled out, they never had a controlling stake. Worst case is that EY's loans to AB might be regarded as equity injections by a court.
 
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Thu Dec 22, 2016 10:27 pm

lancelot07 wrote:
Waterbomber wrote:
EY said that they can turn AB around. So let them put their money where their mouth is until the very last cent.
If it goes bankrupt, let EY be liable for all their debts and obligations. If mismanagement can be proven, they can't hide behind the corporate limited liability status anymore.

EY is not liable for AB's debt beyond losing its investment in AB in case of a bankruptcy, including its loans to AB.
Mismanagement by EY can be ruled out, they never had a controlling stake. Worst case is that EY's loans to AB might be regarded as equity injections by a court.


How can mismanagement by EY be ruled out when they were effectively managing the airline?
A judge will not care about the stake percentage when we get close to 50%. He will look at who made the bad initiatives, who took the bad decisions, who was making the decisions, etc...
At AZ too, it's more than apparent that EY is calling the shots, regardless of whether they own more or less than half of the outstanding shares. It doesn't help that EY put their livery on another subsidiary airline of which they own less than half on paper.
It doesn't mean that other shareholders don't get to carry their fair share of liabilities, but in case of mismanagement, it goes beyond shared and limited liability. Decisions and intentions are scrutinised and the guys who made the bad decisions or showcased non-genuine intentions, get to carry most of the weight.
 
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 7:06 am

Waterbomber wrote:
How can mismanagement by EY be ruled out when they were effectively managing the airline?
A judge will not care about the stake percentage when we get close to 50%. He will look at who made the bad initiatives, who took the bad decisions, who was making the decisions, etc...

1. AB was a basket case before EY got involved.
2. How could EY manage AB with a 29%-stake ? They did not have the voting rights do enforce anything, all they could do was uttering wishes. Bad decisions? Board and management, voted into their positions by a majority of AB's shareholders (+unions). Their fault, when they listen to EY's wishes.
3. Bad business is not illegal. Anyone demanding EY's liability would have to prove that EY carved out a lot of money from AB and left a hollow shell. And this is certainly not the case, EY injected tons of money.
 
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 7:40 am

lancelot07 wrote:
Waterbomber wrote:
EY said that they can turn AB around. So let them put their money where their mouth is until the very last cent.
If it goes bankrupt, let EY be liable for all their debts and obligations. If mismanagement can be proven, they can't hide behind the corporate limited liability status anymore.

EY is not liable for AB's debt beyond losing its investment in AB in case of a bankruptcy, including its loans to AB.
Mismanagement by EY can be ruled out, they never had a controlling stake. Worst case is that EY's loans to AB might be regarded as equity injections by a court.



OK, we are not Insiders and we are not in Possession of the accounting Details of EY and AB. But it is safe to say that EY is almostfully responsible for AB debt. For the simple reason that without a declaration of Patronage or a similar legal documet, Mr. Pichler resp. his predecessor would have been forced to declare bankruptcy. Delaying a bankcruptcy is a crime and the officers of the Company become personally responsible, with their private wealth. Nobody n Business would sign a work contract without the document for Exoneration on Hand.

That makes EY and whoever co-signed fully responsible to cover the debt. Obviously EY sees that so as well because they are reported to consztruct a deal with LH whereby LH could use AB's debt (if AB is absorbed by LH) to Offset with their Profit, in shrt make ABs debt tax deductible for LH. Would not cost LH a dime-

Whatever Comes out of this, LH is clearly in the driving seat and can pick the rasins in that deal. Those who like the stuff can get the Popcorn out.
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fraT
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 10:45 am

Waterbomber wrote:
I don't really see the same competition law constraints that some of us here are seeing and am coming from a German law legal background, on domestic routes quite frequently there already is a monopoly that is only in competiton with our rather potent rail service. Also, looking at the counterfactual of the two not merging, there would not be more competition since AB would go down the pipe altogether.


I personally don't think that competition on the domestic market is something that the EU should rule upon.
The issue is that AB and LH merger will give rise to a huge competition issue for Germany on in and outbound international travel.
If the EU allow them to merge, in theory the next day LH could cancel all AB flights and force all air travel through their existing hubs at higher fares.
The German international travel market is too big to be allowed to be managed by one airline.

If AB goes bankrupt, new entrants can come in and compete for LH's clientele. LH would have to grow organically, ie much slower, to absorb AB's market share.
It's one thing to be handed over aircraft and crews in a running operation, it's a totally different when you have to go out to look for aircraft, induct them, hire crews, etc...
Also, there is the customer and operational database which is worth gold. If LH gets those handed over, new entrants have no chance of competing against them for ex AB customers.

There is the matter of staff lay-offs in bankruptcies. Other airlines have been allowed to fail in the name of preserving fair competition despite that it resulted in social bloodbaths. So why not AB?
Plenty of good jobs in Germany compared to Cyprus, Hungary, etc...



Your post sounds as if there is no international competition for LH and AB. The opposite is the case. Basically every major airline serves one or more German cities including many low cost carriers. DY just announced that they may start long haul flights out of DUS.

So even if LH would shut down the AB routes (which I don't see coming), there would be other carriers taking the opportunities.
Additionally LH/AB may be forced to hand over some slots to the competition.

So I don't think, there is a reason to block a potential LH/AB merger.
 
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seahawk
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 12:07 pm

I do not expect a merger. The debt AB has accumulated is too high and the value of their assets way too low, even if LH would want to take it to offset profits against it, it would still be a heavy burden. Imho AB will go into bankruptcy with LH picking up the pieces.
 
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 12:29 pm

Well, AB has nothing to offer that would make a Merger viable. The value of AB is likely 1 €, given that the Company is handed over to a potential buer with clean sheet, meaning no det. The potential buyer would still assume, from that Moment, the liabilties whoch are the aircraft leases. the personell etc. The assets are mainly virtual, Slots, routes, an established customer base. The tax credit which an accumulated debt would provide, may be an asset, if the taxmen agree. Wthout their Agreement, EY would have to cover the losses and possibly get some Money out in a cordial Agreement with LH.

Bankcruptcy seems not to be an Option, both EY and LH would lose control and at the end of the day friendly Ryanair makes an offer the Administrator cannot refuse.
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seahawk
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 12:42 pm

More a Tengelmann solution imho
 
PanHAM
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 12:55 pm

Well yes, Tengelmann absorbed the losses and got some Money fromEdeka and Rewe for selling them the Shops. But no one had to worry about foreign owneship rules
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lancelot07
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 1:21 pm

seahawk wrote:
I do not expect a merger. The debt AB has accumulated is too high and the value of their assets way too low, even if LH would want to take it to offset profits against it, it would still be a heavy burden. Imho AB will go into bankruptcy with LH picking up the pieces.

AB's financial debt is for a large part owned by EY. If this is part of the deal, things may look very different.
 
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 1:22 pm

This all sounds very doubtful. First, why would anyone really want to merge with or take over AZ? The airline is a basket case. Always has been. It's not profitable and does not have a structure to make itself so. Etihad spent a ransom to rebrand it and try and repurpose it but the issue with AZ is that it faces very strong competition from low cost carriers in its domestic market and its fractured hub structure (FCO, LIN, with MXP not being a hub, but just a spoke with a handful of flights, doesn't work). Italy's economy isn't growing, premium demand to Italy is likely focused on MXP not FCO, and MXP is very far from Milan and inconvenient. It's actually closer to Turin.

Air Berlin just doesn't know what it wants to be and Germany likely never really did need a second large airline beyond LH. Merging AB and AZ might make sense from a scale perspective but one has to question whether this whole experience doesn't cause large scale losses for Etihad and what impact that will have on it, particularly since Qatar Airways and Emirates don't seem to invest in troubled airlines.
 
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 1:43 pm

Cointrin330 wrote:
MXP is very far from Milan and inconvenient. It's actually closer to Turin.

Driving from MXP to central Milan is 31 miles (46 minutes); driving instead to Turin is 83 miles (96 minutes). MXP is far from the city it serves, but it's about the same distance as DEN is from Denver (although the drive to Denver is 10 minutes quicker).
 
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 1:53 pm

PanHAM wrote:
The deal can only be that EY and the other owners asume their responsibilities and that LH pays a price which must be negotiated and reflect the true value of AB. If, on top of that EY want's to buy a 10% share of LH, fine.


Not on top of that. LH won't pay a dime for AB, Etihad will forfeit all financial debt owed to them by Air Berlin, pay off all financial debt owed to other debtors by Air Berlin and then redeem their stake in AB in return for a 10% stake in Lufthansa.

Personally I find it unlikely that after this has happened Etihad will still pay cash to get to 10%, given Lufthansa's current market cap and the amount of debt we are talking about. But if they do, kudos to LH's treasury team for making a good deal.
 
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 2:29 pm

manicottiK wrote:
Cointrin330 wrote:
MXP is very far from Milan and inconvenient. It's actually closer to Turin.

Driving from MXP to central Milan is 31 miles (46 minutes); driving instead to Turin is 83 miles (96 minutes). MXP is far from the city it serves, but it's about the same distance as DEN is from Denver (although the drive to Denver is 10 minutes quicker).


MXP is a pain. A taxi is a about 80/90 Euros to the center and the bus takes for ages. Europeans are not used to drive long distances to get anywhere unlike the Americans.
 
PanHAM
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 2:35 pm

but EY can get a 10% stake of LH only when LH issues mew Shares in order to dilute the foreign ownership to the meximum of 45% of ALL foreign shareholders. I'd say that requires real cash and no tax deductibles. The other Option is that EY buys a share parcel from another foreign owner.
Plus whatever it Needs to Beauty the bride, EY will still have to pay a ton f Money to get rid af AB and I am not even talking about AZ.
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 2:36 pm

Cointrin330 wrote:
why would anyone really want to take over AZ?

If Italy reverts to the Lira, which is increasingly likely, Alitalia becomes a lower cost airline and its current debt a fraction of today's value.
 
lancelot07
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 2:43 pm

LH's management could ask its shareholders to approve a raise of capital and then use these new shares as payment for an acquisition.
But i still have doubts about a share deal, let alone a merger (a totally different animal which per se does not require any buying or selling of shares). An asset deal seems to be the easiest and safest possibility.
But what will be offered to the other AB-shareholders? They, after all, have to agree to any such deal - and they might not be amused.
 
lancelot07
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 2:47 pm

uberflieger wrote:
Cointrin330 wrote:
why would anyone really want to take over AZ?

If Italy reverts to the Lira, which is increasingly likely, Alitalia becomes a lower cost airline and its current debt a fraction of today's value.

AZ's Euro-denominated debt to Italian institutions probably yes. But certainly not foreign debt or foreign currency debt.
And with the Lira, high interest rates are bound to return, raising the cost of debt.
 
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 3:22 pm

I think you are making a big deal out of competition.

If Eurowings/Air Berlin merge, the main European low-cost carriers will expand overnight in routes/airports where they can compete with the new carrier.

For instance, an interesting example is Stuttgart, where Eurowings has 32% of the market share and Air Berlin 20% (so a combined airline will have 52%).

Now routes where they compete:

- Berlin. Ryanair could easily take it (they already offer SXF-CGN multiple daily)
- Catania. Holiday destination (not key route). Again, easyJet or Ryanair could easily jump in.
- Hamburg. Same as Berlin.
- Malaga. Same as Catania.
- Naples. Same as CTA or AGP... heck Ryanair even started a base there the other day.

The rest is offered by only one of them or anyone else (easyJet, etc). So see how the big deal is.

The main issue will be with some transversal domestic routes, but Ryanair jumping at them will probably decrease prices (like Cologne-Berlin which is usually the cheapest route in Germany now)
 
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 4:43 pm

lancelot07 wrote:
with the Lira, high interest rates are bound to return, raising the cost of debt

Italian interest rates are likely to rise, but dramatically and completely out of step with the Euro zone? Hey, your guess is as good as mine. ;)

'Lira' Alitalia will be more competitive on crucial European routes. This should lead to expansion and new, more productive employees will make AZ even more attractive. Increased cost outside Italy will be mitigated being part of a European airline group. I can also see AF/KL & IAG vying for a 'Lira' Alitalia.
 
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 5:36 pm

No, because Lira, Euro or a new owner do not change the basic problems of AZ. Which is no workable hub, the 2 airports of Milan and strong unions and heavy state influence.
 
masseybrown
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Fri Dec 23, 2016 5:42 pm

VSMUT wrote:
I just cant see this happening. What are the chances that the EU would allow LH to take over AB, and possibly even Alitalia? IMHO, Air Berlin maybe, but surely not Alitalia...


Really. Why would anybody want Alitalia? The routes, maybe, but not the organization.
 
Waterbomber
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Sat Dec 24, 2016 1:27 am

SCQ83 wrote:
I think you are making a big deal out of competition.

If Eurowings/Air Berlin merge, the main European low-cost carriers will expand overnight in routes/airports where they can compete with the new carrier.

For instance, an interesting example is Stuttgart, where Eurowings has 32% of the market share and Air Berlin 20% (so a combined airline will have 52%).

Now routes where they compete:

- Berlin. Ryanair could easily take it (they already offer SXF-CGN multiple daily)
- Catania. Holiday destination (not key route). Again, easyJet or Ryanair could easily jump in.
- Hamburg. Same as Berlin.
- Malaga. Same as Catania.
- Naples. Same as CTA or AGP... heck Ryanair even started a base there the other day.

The rest is offered by only one of them or anyone else (easyJet, etc). So see how the big deal is.

The main issue will be with some transversal domestic routes, but Ryanair jumping at them will probably decrease prices (like Cologne-Berlin which is usually the cheapest route in Germany now)


I don't think that Germany is a good market for Ryanair nor Easyjet.
They've tried their luck many times but have never been able to penetrate the market because the P2P operations that they run just isn't what Germany needs, given how catchement area's are spread over the large country. They can't be everywhere and each catchement area is too small to build large bases.
They'd have to spread themselves thin at each base, with the result of offering too few frequencies and appealing only to low yield leisure flyers.
The reason why FR was able to build one of their largest bases at CRL is because they have access to a high density catchement area with one airport.
You can't do the same at Hahn or even in FRA. Their FRA base is a waste of resources FWIW. Ryanair is losing focus, making more money short-term but risk losing their core business while not being able to build the higher end business as they like.
If AB and LH merge, nothing will change to the entire dynamic, the market will stay impenetrable.
If AB goes out of business, there could be an opening.

I see that Lufthansa is lobbying already on airliners.net, but it won't work.
Lufthansa has too much power in Europe already, they shouldn't be allowed to absorb any more operations. They can grow organically if they want to.
If you look in detail, LH is under huge pressure in all their departments. Eurowings is a failure and will become an even larger one, because it has no focus. They want to build a hub in every larger city, with some long haul, in the end they won't achieve anything. They're just building a new Air Berlin clone that they now want to merge with AB. It just doesn't make sense. LH needs to take control of EW and OS before expanding any further.
It also doesn't make sense to dilute other shareholders to give EY any shares. EY has nothing to offer with AB.

AB should be allowed to fail so that other carriers, new and old, LCC's and legacies, can compete for market share.
It worked out quite well in BUD with Malev.
 
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LOWS
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Sat Dec 24, 2016 1:47 am

uberflieger wrote:
Cointrin330 wrote:
why would anyone really want to take over AZ?

If Italy reverts to the Lira, which is increasingly likely, Alitalia becomes a lower cost airline and its current debt a fraction of today's value.


You think Italy would be allowed to leave the Euro? Hahahahaha...

Also, their debts are in Euro denominated contracts. They'd have to not deal with just high levels of debt, but a currency that would have little vs. the Euro. Inflation and interest rates would skyrocket. Italian consumers would suffer immensely. AZ could easily go bankrupt.
 
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BawliBooch
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Sat Dec 24, 2016 2:37 am

lancelot07 wrote:
Waterbomber wrote:
How could EY manage AB with a 29%-stake ?


If the EY experience with 9W is any indicator, then yes EY has a way of pulling way more influence than its stake. EY took a 24% stake in 9W in 2013 and almost overnight we saw 9W divert half its 738 fleet to running shuttles from every corner of India to AUH at the expense of domestic consolidation. Some of their 77W's went over to EY too. So yes, EY does pull more than its weight in investments they make.

Bad business may not illegal - but it certainly is accountable no?
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jimbobjoe
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Sat Dec 24, 2016 3:38 am

senatorflyer wrote:
manicottiK wrote:
Cointrin330 wrote:
MXP is very far from Milan and inconvenient. It's actually closer to Turin.

Driving from MXP to central Milan is 31 miles (46 minutes); driving instead to Turin is 83 miles (96 minutes). MXP is far from the city it serves, but it's about the same distance as DEN is from Denver (although the drive to Denver is 10 minutes quicker).


MXP is a pain. A taxi is a about 80/90 Euros to the center and the bus takes for ages. Europeans are not used to drive long distances to get anywhere unlike the Americans.


Why would you drive? The Malpensa Express is a fast, comfortable train that gets you there for €13. Once it leaves the city centre it makes no stops.

I can think of a bunch of airports which are closer (in some instances--much closer) to their city centers but don't have train service anywhere near as good as MXP's.
 
lancelot07
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Sat Dec 24, 2016 6:46 am

BawliBooch wrote:
lancelot07 wrote:
Waterbomber wrote:
How could EY manage AB with a 29%-stake ?


If the EY experience with 9W is any indicator, then yes EY has a way of pulling way more influence than its stake. EY took a 24% stake in 9W in 2013 and almost overnight we saw 9W divert half its 738 fleet to running shuttles from every corner of India to AUH at the expense of domestic consolidation. Some of their 77W's went over to EY too. So yes, EY does pull more than its weight in investments they make.

Bad business may not illegal - but it certainly is accountable no?

Sure they throw their weight around. But they cannot enforce anything. It is not their fault when somebody listens to their (unpaid) advice.

When something is not illegal, there is no case to answer. Get real - thousands of companies go broke every day. There is no guarantee for success.
 
lancelot07
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Sat Dec 24, 2016 7:58 am

LOWS wrote:
uberflieger wrote:
Cointrin330 wrote:
why would anyone really want to take over AZ?

If Italy reverts to the Lira, which is increasingly likely, Alitalia becomes a lower cost airline and its current debt a fraction of today's value.


You think Italy would be allowed to leave the Euro? Hahahahaha...

Also, their debts are in Euro denominated contracts. They'd have to not deal with just high levels of debt, but a currency that would have little vs. the Euro. Inflation and interest rates would skyrocket. Italian consumers would suffer immensely. AZ could easily go bankrupt.

Italy might just do it, and not ask silly questions. Nobody can stop them, you have to realize that the Italian state is the 3rd largest debtor in the world.
Almost all of this debt is under Italian law - and laws are subject to change, remember Greece? But somehow i doubt that Italy really wants to leave.
 
SCQ83
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Sat Dec 24, 2016 8:05 am

Waterbomber wrote:
I don't think that Germany is a good market for Ryanair nor Easyjet.
They've tried their luck many times but have never been able to penetrate the market because the P2P operations that they run just isn't what Germany needs, given how catchement area's are spread over the large country. They can't be everywhere and each catchement area is too small to build large bases.
They'd have to spread themselves thin at each base, with the result of offering too few frequencies and appealing only to low yield leisure flyers.
The reason why FR was able to build one of their largest bases at CRL is because they have access to a high density catchement area with one airport.
You can't do the same at Hahn or even in FRA. Their FRA base is a waste of resources FWIW. Ryanair is losing focus, making more money short-term but risk losing their core business while not being able to build the higher end business as they like.
If AB and LH merge, nothing will change to the entire dynamic, the market will stay impenetrable.
If AB goes out of business, there could be an opening.

I see that Lufthansa is lobbying already on airliners.net, but it won't work.
Lufthansa has too much power in Europe already, they shouldn't be allowed to absorb any more operations. They can grow organically if they want to.
If you look in detail, LH is under huge pressure in all their departments. Eurowings is a failure and will become an even larger one, because it has no focus. They want to build a hub in every larger city, with some long haul, in the end they won't achieve anything. They're just building a new Air Berlin clone that they now want to merge with AB. It just doesn't make sense. LH needs to take control of EW and OS before expanding any further.
It also doesn't make sense to dilute other shareholders to give EY any shares. EY has nothing to offer with AB.

AB should be allowed to fail so that other carriers, new and old, LCC's and legacies, can compete for market share.
It worked out quite well in BUD with Malev.


I don't know what you are talking about (???) whether FR or U2 have been unsuccessful in Germany. Ryanair is the largest carrier at SXF. easyJet is the second. FR has multiple daily flights between Berlin and Cologne. Both carriers are expanding in Germany day by day and planes are getting full; i.e. Ryanair in CGN has now a major base there.

Germany will end up with a local major carrier (Lufthansa/Eurowings, like Iberia/Vueling or Air France/Transavia) and multiple low-costs (Ryanair, Norwegian, easyJet, Tranasavia - they even have a base in MUC -, Vueling, etc). No competition problem. The reality is that if Air Berlin disappears, it will leave a small gap that will be corrected overnight. Ryanair, Norwegian or easyJet have dozens of new planes arriving and they will love to jump at lucrative German routes (both domestic and international).
 
aviationaware
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Sat Dec 24, 2016 10:05 am

LOWS wrote:
You think Italy would be allowed to leave the Euro? Hahahahaha...


What do you mean 'allowed'. Italy, despite all the tries of the soviet-cetrist eurocrats, is still a sovereign nation. They can do whatever they want, including breaking treaties - which should come as no shock to the Eurocrats considering they do the same all the time.

If Italy decides to elect a real government, not a puppet regime like the current one, there is nothing the neolibs in Brussels can do. That's not to say they won't try, the antidemocratic EU movement has a long history of ignoring election results (Ireland referendum for example).

Meanwhile, Alitalia is a basket case either way and not an attractive asset for anyone. Etihad won't be able to sell it.
 
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seahawk
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Sat Dec 24, 2016 10:08 am

When the German market is one legacy vs. the loCos it will just reflect the other European markets or can you name a country with 2 legacies offering intra-european connections.
 
15a
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Sat Dec 24, 2016 10:38 am

BawliBooch wrote:
lancelot07 wrote:
Waterbomber wrote:
How could EY manage AB with a 29%-stake ?


If the EY experience with 9W is any indicator, then yes EY has a way of pulling way more influence than its stake. EY took a 24% stake in 9W in 2013 and almost overnight we saw 9W divert half its 738 fleet to running shuttles from every corner of India to AUH at the expense of domestic consolidation. Some of their 77W's went over to EY too. So yes, EY does pull more than its weight in investments they make.

Bad business may not illegal - but it certainly is accountable no?

Id suggest a fact check before you post - there are a grand total of 77 737s in the 9W fleet and a grand total of 5.5 aircraft are used to do AUH shuttles. So no EY doesnt punch above weight.
 
SCQ83
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Sat Dec 24, 2016 11:05 am

seahawk wrote:
When the German market is one legacy vs. the loCos it will just reflect the other European markets or can you name a country with 2 legacies offering intra-european connections.


Spain; you have Iberia (Oneworld) and Air Europa (Skyteam).

However I have been always a bit suspicious of UX's business model. They are part of larger group (Globalia) which is privately owned so it is a bit opaque.
 
A340Man
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Sat Dec 24, 2016 11:23 am

From the Airline routes newsletter from the 22nd of December there are these new flights by Eurowings from Munich:


"Eurowings launches Munich base; expands Vienna service in S17
Posted: 21 Dec 2016 12:05 PM PST
Eurowings in summer 2017 season is launching new base at Munich, where the airline will offer 30 destinations from 31MAR17. Reservations for these new routes gradually opened in the last few days.

eff 31MAR17 Munich – Amsterdam 6 weekly (Day x6)
eff 31MAR17 Munich – Basel/Mulhouse 5 weekly (Day x67)
eff 31MAR17 Munich – Edinbugh 5 weekly (Day x36)
eff 31MAR17 Munich – Geneva 6 weekly (Day x6)
eff 31MAR17 Munich – Glasgow 2 weekly (Day 35)
eff 31MAR17 Munich – London Stansted 6 weekly (Day x6)
eff 31MAR17 Munich – Nice 3 weekly (Day 457)
eff 31MAR17 Munich – Rome Fiumcino 5 weekly (Day x67)
eff 01APR17 Munich – Faro 2 weekly (Day 36)
eff 01APR17 Munich – Kavala 2 weekly (Day 36)
eff 01APR17 Munich – Lamezia Terme 1 weekly (Day 6)
eff 01APR17 Munich – Palma Mallorca 1 weekly (Day 6; excluding service by Eurowings Palma Mallorca-based flight)
eff 01APR17 Munich – Thessaloniki 4 weekly (Day x135)
eff 02APR17 Munich – Mykonos 2 weekly (Day 57)
eff 03APR17 Munich – Naples 3 weekly (Day 147)
eff 03APR17 Munich – Palermo 2 weekly (Day 14)
eff 07APR17 Munich – Cagliari 1 weekly (Day 5)
eff 08APR17 Munich – Bastia 1 weekly (Day 6)
eff 08APR17 Munich – Corfu 1 weekly (Day 6)
eff 08APR17 Munich – Dubrovnik 2 weekly (Day 36)
eff 08APR17 Munich – Kos 1 weekly (Day 6)
eff 08APR17 Munich – Rhodes 2 weekly (Day 26)
eff 09APR17 Munich – Brindisi 1 weekly (Day 7)
eff 09APR17 Munich – Olbia 3 weekly (Day 257)
eff 10APR17 Munich – Irakleion 2 weekly (Day 13)
eff 13APR17 Munich – Porto 1 weekly (Day 4)
eff 01MAY17 Munich – Chania 1 weekly (Day 1)
eff 02MAY17 Munich – Pula 3 weekly (Day 257)
eff 03MAY17 Munich – Zadar 3 weekly (Day 136)
eff 04MAY17 Munich – Ibiza 1 weekly (Day 4)"

All of these flights are being operated by Air Berlin as per the Eurowings website.

This could be something of a confirmation of LH and AB merging their operations.
 
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BawliBooch
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Sat Dec 24, 2016 11:56 am

15a wrote:
Id suggest a fact check before you post - there are a grand total of 77 737s in the 9W fleet and a grand total of 5.5 aircraft are used to do AUH shuttles. So no EY doesnt punch above weight.

Not literally bro!

But fact is 9W had to divert some of its 737's to run the AUH shuttles. Are these making higher yields than if they were deployed on other domestic/regional runs? 9W is withdrawing/reducing frequence on key domestic markets and these 5-10 737's would have helped boost their offering.
Mr.Kapoor's favorite poodle!
 
PanHAM
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Sat Dec 24, 2016 12:00 pm

They are not merging their operations. They have signed a deal that LH wet leases a number of A320 which then operates the above flights and possibly additional flights as well.
Another part of AB went to TUIFly and Niki and the remaining 75 aircraft operate as and for AB. That part might be absorbed into LH in the future but that decision is pending
Was Erlauben Erdogan!!!
 
WIederling
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Re: Etihad mulling taking stake in Lufthansa - Air Berlin to merge with Lufthansa, Alitalia might be next

Sat Dec 24, 2016 1:13 pm

aviationaware wrote:
soviet-centrist eurocrats, ........... Eurocrats ........... a puppet regime like the current one,.... history of ignoring election results ...


You seem to have a Sapir-Whorfish language problem.
Murphy is an optimist

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