European Competition Commissioner Margrethe Vestager has expressed “deep concerns regarding competition” given the agreement through which Lufthansa is set to take over the majority of Air Berlin’s assets, another indication that the German airline might be forced to offer more concessions in exchange for the transaction’s approval.
Lufthansa consolidated its leading position in the aviation market last month by acquiring significant parts of rival Air Berlin for 210 million EUR.
Lufthansa intends to use Air Berlin’s assets to rapidly expand its low-cost subsidiary, Eurowings. It will also take over Air Berlin’s Niki division and its regional company, LG Walter.
Lufthansa must convince European competition authorities that it will not benefit from a dominant position in the German air transport market.
The European Commission is expected to officially announce its decision by December 12. If Lufthansa fails to address competition concerns by then, the EC will open an in-depth investigation into the transaction.
At the same time, on December 12, low-cost carrier easyJet is expected to obtain European Commission approval to take over the remainder of Air Berlin’s assets.
EasyJet is set to acquire part of Air Berlin’s operations at Berlin Tegel Airport for approximately 40 million EUR. Additionally, easyJet will take over leasing contracts for 25 A320 aircraft, as well as approximately 1,000 of Air Berlin’s pilots and crew members.
If the transaction between easyJet and Air Berlin is approved, easyJet will become the largest carrier based in Berlin, with a capacity of 16 million seats, overtaking the Lufthansa group, which, after taking over the Air Berlin divisions LGW and Niki, will have a capacity of 10.7 million seats, while Ryanair will be in third place with a capacity of 5.9 million seats.
Source: Wall-Street
Frequently Asked Questions
Why is the European Commission investigating the Lufthansa-Air Berlin deal?
The Commission is concerned that the acquisition could lead to a dominant market position in Germany, potentially stifling competition and affecting airfares.
What is the value of Lufthansa’s acquisition of Air Berlin assets?
Lufthansa agreed to acquire significant parts of Air Berlin, including the Niki and LG Walter divisions, for a total of 210 million EUR.
How will easyJet’s involvement affect the Berlin aviation market?
By acquiring Air Berlin’s Tegel operations, easyJet is set to become the largest carrier in Berlin with 16 million seats, surpassing the Lufthansa group.