EU may block Lufthansa acquisition of Air Berlin’s Niki

It is understood that Lufthansa’s CEO, Carsten Spohr, is set to meet the EU Competition Commissioner, Margrethe Vestager, to discuss anti-trust concerns relating to the German carrier’s intended purchase of Air Berlin assets. The deal, which is valued at €210 million (US$249 million), would see Lufthansa take over both Niki and LG Walter, businesses owned by the now defunct Air Berlin, further strengthening its domestic position, while also helping to expand its low-cost subsidiary, Eurowings.
Lufthansa appeared to be given preferential treatment when Air Berlin’s assets were made available for purchase, which caused considerable concern for other airlines, including easyJet and Ryanair, as well as consumer groups, who are concerned over Lufthansa dominance of Austrian routes. With over 100 routes overlapping between Lufthansa and Air Berlin providing a near monopoly situation, concessions are being sought, and it is the nature of these which will decide whether or not the EU Commission will alter its stance on the current position. It is believed that, currently, it is leaning towards blocking the acquisition of Niki.
In the event Lufthansa fails to propose acceptable concessions, the EU Commission will launch an in depth probe. Irrespective of the result, the delays caused by the probe may bring into question the carrier’s acquisition of Niki anyway, as it would need to be financially propped up for an even longer period before Lufthansa could begin to restructure it.
Air Berlin filed for the German equivalent of Chapter 11 Bankruptcy Protection in August after many years of losses and the withdrawal of financial support from one its principal investors, Etihad Airways. The German government provided a €150 million (US$178 million) bridging loan to enable the low-cost carrier to continue operating for three months while a buyer was sought, also securing work for the 7,200 employees. The final commercial flight by an Air Berlin plane took place on October 27, on the Munich to Berlin route.