Lufthansa and IAG emerge as main contenders in bidding war for Air Berlin

IAG, the parent company of British Airways, Iberia, Vueling and Aer Lingus now appears to be one of the principal rivals to Lufthansa in the bidding war for all, or parts of the failed German carrier, Air Berlin. September 15 was the deadline for submission of bids and a creditors’ meeting is being held on Thursday of this week to explore the merits of each bid. A decision will be made on September 25, the day after the German election.
It is uncertain what parts of Air Berlin Lufthansa or IAG is interested in, but speculators consider that Niki, the low-cost subsidiary of Air Berlin, could certainly be of interest to IAG as it would integrate well with Vueling and the recently launched Level. However, it is understood that part of Lufthansa’s bid includes Niki as well. Other interest has also been shown by easyJet, who is believed to have its eye on takeoff and landing slots at Berlin, as well as some routes from Düsseldorf, Munich and Hamburg.
Interest from individuals has included Rudolf Wöhrl the aviation investor, Utz Claasen the entrepreneur, and Jonathan Pang, the Chinese entrepreneur who owns Parchim, a small airport in the north east of Germany. Viability of the plans from each of these interested parties are unlikely to be seen as viable by Air Berlin’s creditors.
It is not yet known whether Niki Lauda, the founder and former owner of Niki, has followed through with his intention to submit a joint bid with Condor, the leisure airline subsidiary of Thomas Cook. However, there has only been one serious bidder for Leisure Cargo, the Air Berlin freight subsidiary with 20 aircraft, and the maintenance company Air Berlin Technik. This is understood to be Zeitfracht, the Berlin-based logistics company.
Once bids have been accepted, there will be considerable work required with regard to the future of Air Berlin’s employees. Under German law, employees of an active business which is sold off are entitled to a guaranteed one-year wage. This also applies to insolvencies. It is understood that Lufthansa wants to take on sections of existing air crews, but it intends to pay them the same wage as Eurowings crew, which could lead to industrial dispute. The same may also apply with regard to ground staff who may not be required. Ultimately, there could be long delays in any takeover.