Revelation wrote:

seahawk wrote:

And I am not supporting the LH take-over, but I am also not supporting FR which just wants the slots to be auctioned off. Every bidder willing to take on some employees should get a chance and when possible a part of the company, if he offers a competitive price for it.

So do you describe the process Alitalia is going through as a simple auction of slots?

I ask because at least according to the quote in leghorn's article, that is what FR is asking for.

To be honest I do not see much difference between the 2 situations. The Italian state has offered a bridging loan and interested parties can make their offer. The only difference is that it seems like Easy and LH have already submitted a bid that would probably see a significant number of employees keeping their job and they seem to be willing to pay something for the remaining AB assets. For AZ such a bid does not seem to have come up yet. (which to be honest is logical because at AB the employee contracts are competitive while they are not at AZ and the unions have made it very uninteresting for any bidder to enter into the existing contracts at AZ) To be honest the previous insolvencies of AZ were at least as manipulated as the current AB one.

According to the below source, LH wants to take up to 90 aircraft of AB.

http://www.tagesspiegel.de/wirtschaft/n ... 01988.html

Crazy idea:

Could these aircraft possibly be used for EW ops in Italy ?

As LH was also bidding for AZ ... and Italy is an interessting market for LH.

PanHAM wrote:

Niki would fit perfectly into Condor, but could also oerate as a stand-alone. Forget about some Phoenex-from-the-ashes Swiss style. AB is done and gone. Wjatever routes LH nd U2 pick, the lower Leasing and Overhead costs will make the difference and the successor can only achieve that under the umbrella of a Major carrier.

I did not mean Crossair in the sense of rising from the ashes, but in the sense that it would be able to absorb routes, slots, aircraft and staff. Considering that there might be no time to let AB Aeronautics receive an AOC, Niki is the next best alternative to insulate operations from the deeply inndebted company.

factsonly wrote:

Revelation wrote:

It will be interesting to see how happy the people who are supporting this LH take over of AB assets will be when the inevitable strikes happen:

Some interesting 2017 statistics on LH dominance at FRA, compared to its European rivals:

Take a look at Home Carrier market share of total seats at the four major EU Hubs:

1. FRA - LH offers 64.5% of all available seats at FRA airport
2. CDG - AF offers 51.5% of all available seats at CDG airport
3. AMS - KL offers 48.3% of all available seats at AMS airport
4. LHR - BA offers 47.8% of all available seats at LHR airport




Interesting readinghttp://www.anna.aero/2017/08/16/ ... than-2007/

Misleading statistics Germany is polycentric with about 220 Million Pax p.a. LH carried soe 110 mio Pax, but including OS and LX. IIRC the LH market share in Germany does ot exceed 40%. It is a wide open and free arket for all.

Egerton wrote:

I wonder if the only assets having real monetary value are some of the slots. Everything else has low, nil or negative value.

The only way to acquire these slots seems to be for someone to pay the Insolvency Practitioner real money for them on the assumption that the airport authorities will re-assign them from Air Berlin to that someone. Some negotiating is needed to achieve this.

That someone may then pay money to the aircraft owner for a new lease, and then that someone can hire the employees they need. In such cases, the new lease and employment contracts will be on cheaper terms than was the cost for Air Berlin. More negotiating to be done, all taking time.

The time taken will be at least 2 months, more likely 3 months.. Am I on the right track?

Yes, it is all very murky. Slots that cannot be traded clearly will be traded. It will be interesting to see what mechanism will be used to account for this, or if it'll just be a magician's wave of the hand and it'll all be done and dusted.

Egerton wrote:

For LH to quickly take everything (good or bad|) will just leave them destroying value for their shareholders. Even LH taking just some of the less awful parts of Air Berlin will lead to the same outcome, but it will take longer to become apparent. To buy with the intention of preserving an incumbent's near monopoly will be a bad move for LH shareholders, however much it pleases German folk.

There is a way for LH to improve its financial position. It is to continue to cut it's employee costs.

It's already pretty clear what parts LH wants. These are largely the ones LH is already utilizing via wet lease from AB. It's already clear they will be put under the Eurowings structure so it will be lower employee costs for LH, once the inevitable strikes are paid for.

seahawk wrote:

To be honest I do not see much difference between the 2 situations. The Italian state has offered a bridging loan and interested parties can make their offer. The only difference is that it seems like Easy and LH have already submitted a bid that would probably see a significant number of employees keeping their job and they seem to be willing to pay something for the remaining AB assets. For AZ such a bid does not seem to have come up yet. (which to be honest is logical because at AB the employee contracts are competitive while they are not at AZ and the unions have made it very uninteresting for any bidder to enter into the existing contracts at AZ)

I would say the difference is that they are very similar, with the main difference that in this case LH has already the pole position in terms of determining what assets it wants. It also seems this case is moving a lot faster, either by design (so no one else can get on the train) or simple political expediency (smaller bridging loan, less bad press) or both.

seahawk wrote:

To be honest the previous insolvencies of AZ were at least as manipulated as the current AB one.

It's interesting that you draw such a parallel. If they are even close to comparable, that's a bad sign for German business and politics, IMHO.

Geht es nach dem Willen von Bundesverkehrsminister Alexander Dobrindt, würde die Lufthansa den Großteil der Air Berlin bekommen. "Wir brauchen einen deutschen Champion im internationalen Luftverkehr", sagte der CSU-Politiker der "Rheinischen Post". "Deswegen ist es dringend geboten, dass Lufthansa wesentliche Teile von Air Berlin übernehmen kann."

Gegenwind kommt von Wettbewerbshütern. Der Chef der Monopolkommission, Achim Wambach, sagte der "Rheinischen Post", die Lufthansa müsse mit strengen Auflagen rechnen. Air Berlin und die Lufthansa seien auf vielen Strecken direkte Konkurrenten. Die Lufthansa als größte deutsche Anbieterin müsse für eine Fusion deshalb auf weite Teile der Landerechte von Air Berlin verzichten. Kritik übte der Kommissionschef auch an der Hilfe der Bundesregierung für Air Berlin in Höhe von 150 Millionen Euro.

Auch der Präsident des Bundeskartellamts, Andreas Mundt, sagte der "Süddeutschen Zeitung", die Wettbewerbsbehörde werde sich die Lufthansa-Pläne "gegebenenfalls sehr genau ansehen". Bisher ist aber Mundt zufolge noch keine Übernahme angemeldet.

German transport minister: "We need a german champion in international air transport. It is therefore neccessary for Lufthansa to take over large parts of Air Berlin"
Chairman of the german monopolies commision: "Lufthansa must expect tight regulations, i. e. concede many slots. Not a fan of the loan."
President of the german federal cartel office: "We will examine any take-over plans very closely. There has been no official declaration yet, though."

Clearly the transport minister, Dobrindt, is doing his best to protect Lufthansa, as he has been doing for many years. It will be interesting to see how the different views pan out, especially considering the upcoming elections. It is said that Lufthansa wants to present results as early as next week. If they wait too long, the next government may not honor the promises made today. Niki, 90/138 Airberlin jets and "most of the 17-strong longhaul fleet" are to be integrated into Eurowings.

http://www.tagesschau.de/wirtschaft/air-berlin-123.html

"Wir brauchen einen deutschen Champion im internationalen Luftverkehr"
Spoken life a politician who has half his attention on his brief and half on getting re-elected in the next 6 weeks.

factsonly wrote:

Air Berlin declares 'insolvency' in a peak summer month !!

August sees the highest cash flow...... this clearly indicates its financial position = pretty desperate.

Most airlines fold in February or March, at the end of a long winter........ when cash flow is at its lowest.



(we are obliged to indicate that companies in the Southern Hemisphere witness an opposite effect)

In fact no. People buy their ticket far in advance and cash is already in by the end of spring. Summer is the period when airlines have to pay the bills !

It will be extremely annoying for the LCCs if they have effectively driven the older legacy carriers out of business in a number of Countries through competition in the marketplace only to be denied the spoils of war by politically connected legacy carriers.

AB had to pay for fuel, Catering etc in advance since Long.

The negotiations about the take over are going on since weeks and ight be ready as early as next week

A Transport Minister is just doing his Job, what do you guys expect? Him saying we rather had preferred BA?

Ryanair is ..hm... is bending the truth, to put it politely. In fact, the court has appointed two lawyers as administrators, namely Frank Kebekus and Lucas Flöther. Both had been proposed by airberlin's creditors.

leghorn wrote:

It will be extremely annoying for the LCCs if they have effectively driven the older legacy carriers out of business in a number of Countries through competition in the marketplace only to be denied the spoils of war by politically connected legacy carriers.

What are you talking aboutt? Every LCC can come here and try his luck. If they think that they can fly for € 20 one way FRA to BER go ahead. Now, where is political Support when the Country bils carriers a passenger tax? They took more from AB than they lend to them now. And we don't fight wars in Germany We do Business. Ad someone should tell Mr. Dobrindt that LH is already the European Champion-

Niki also seems to be the only entity that can be used for a speedy sale of AB's operations, since it would allow for a "Crossair"-solution. The issue is only that they want the airline to be split between more than one airline, so they would need two subsidiaries of AB with AOCs, which they don't seem to have.

Not a problem - earlier this year, AB applied for a 2nd AOC, called Air Berlin Aeronautics, with the intention of placing the wet-lease flying for EW under it. But it also opens the door to the creation of a "good" airline and a "bad" airline. So there's your other AOC already.

PanHAM wrote:

A Transport Minister is just doing his Job, what do you guys expect? Him saying we rather had preferred BA?

There is something to be said for diversity in the air transport sector. Instead it seems to be politically expedient to favor the "champion" LH.

Be serious, Revelation BA and AFKL( IAG are not interested, U2 is in the race, Norwegian has to Digest ist own growth and they may have swallowed too much already and FR is running the MOL Show, neating on the bush but not seriously interested either. He would notwant a Germn Airline with German work contracts and the 8K AB employees will not sign an Irish one. WIZZ will fly here but not base here,it would undermine their Business plan.

S, what's left, nada, niente, nuescht.

Just also read that all booked refundable tickets have been changed into non-refundable ones.

vhtje wrote:

YIMBY wrote:

Definitely a German would prefer to fly Finnish airline to British or Spanish

Why would you say that? Do you have any evidence to back up this claim?

There is emotional competence between the three big EU countries in economy and football of who is the Greatest. With Spain and Italy that applies only for football, but the German feel some superiority and mistrust over southern Europe. There are also some mild disputes between Germany and Poland.

That is one though not the biggest reason why Deutsche BA failed. Additionally, today Brexit decreases the sympathies of the German to British.

Finland and the Scandinavian countries as well are considered harmless by the German, probably also the Baltic countries. Hence there are less emotional objections for them. Of course, every carrier must earn its reputation irrespective of the country, which is another issue.

What was said of course does not apply to every German, but is just an average. An that is just my observation, not a scientific fact.

Revelation wrote:

Egerton wrote:

seahawk wrote:

To be honest the previous insolvencies of AZ were at least as manipulated as the current AB one.

It's interesting that you draw such a parallel. If they are even close to comparable, that's a bad sign for German business and politics, IMHO.

Sure it heavily manipulated, because the airline was dead over 2 years ago, while the final point of insolvency solely depended on when EY withdraws the money. But now news say that 3 parties are interested in taking parts of AB, with Thomas Cook being rumoured as the third party. Imho it is obvious that the 3 worked together to keep Rynair out, but there is now law that forbids them from doing so.

PanHAM wrote:

Be serious, Revelation BA and AFKL( IAG are not interested, U2 is in the race, Norwegian has to Digest ist own growth and they may have swallowed too much already and FR is running the MOL Show, neating on the bush but not seriously interested either. He would notwant a Germn Airline with German work contracts and the 8K AB employees will not sign an Irish one. WIZZ will fly here but not base here,it would undermine their Business plan.

S, what's left, nada, niente, nuescht.

Yes, I've expressed doubt earlier that Ryanair would make a viable bid for any of the assets, but still it's interesting that there seems to be little to no concern about "keeping up appearances" with regard to this transaction.

r2rho wrote:

Not a problem - earlier this year, AB applied for a 2nd AOC, called Air Berlin Aeronautics, with the intention of placing the wet-lease flying for EW under it. But it also opens the door to the creation of a "good" airline and a "bad" airline. So there's your other AOC already.

From the news it seems the AOC has not been granted yet.

PanHAM wrote:

Niki would fit perfectly into Condor, but could also oerate as a stand-alone. Forget about some Phoenex-from-the-ashes Swiss style. AB is done and gone. Wjatever routes LH nd U2 pick, the lower Leasing and Overhead costs will make the difference and the successor can only achieve that under the umbrella of a Major carrier.

Why do you think the leasing costs will necessarily be lower?

According to Wikipedia, all AB aircraft are leased, so AB is currently bound to pay the contractual rates, which are probably at a rate reflecting their financial position. If AB sub-leases them to LH or U2, then the sub-lease rate reflects the main lease rate. If ,or when, AB is liquidated, then the aircraft return to the lessor, as there is no legal entity as one party to the contract.

VolvoBus wrote:

Why do you think the leasing costs will necessarily be lower?

According to Wikipedia, all AB aircraft are leased, so AB is currently bound to pay the contractual rates, which are probably at a rate reflecting their financial position. If AB sub-leases them to LH or U2, then the sub-lease rate reflects the main lease rate. If ,or when, AB is liquidated, then the aircraft return to the lessor, as there is no legal entity as one party to the contract.

LH will renegotiate the leases since they are definitely able to pay them. And the aircrafts AB leased to EW and AU, LH bought them from the lessors and leased them back to AB. With this model, they secured themselves from the risk of an AB bankruptcy because in this case they would have gone back to the lessor and this is LH in this case.

German media reports now that even Wöhrl, they guy how owned CityJet, LTU, dba, etc, wants to buy AB with the help of other investors.

http://www.aero.de/news-27294/Woehrl-pl ... erlin.html

r2rho wrote:

Not a problem - earlier this year, AB applied for a 2nd AOC, called Air Berlin Aeronautics, with the intention of placing the wet-lease flying for EW under it. But it also opens the door to the creation of a "good" airline and a "bad" airline. So there's your other AOC already.

"airberlin flights may be operated by TUIfly, LGW Walter or Belair using the airberlin name, livery and flight code." That's taken out of the OW affiliates section.

If flights can be operated by TUIfly, LGW Walter or Belair, that means these three airlines have their own AOC each. If they are part of the AB group throught being wholy-owned subsidiaries, then they are part of the process. Why not choose one for the LH-wetlease and put the subsidiary up to sale as a spin-off??

Obviously we all now who the buyer is gonna be...

C010T3 wrote:

I also recognize that did not adequately express what I meant when I said that "politicians can look past the antitrust laws". I was not inferring that a Ministererlaubnis would be applied in similar fashion as it was done in the case of Kaiser's Tengelmann. It was about being able to defend the sale to Lufthansa before the public eye and opinion. A politician would have difficulty justifying it, if it weren't for the jobs at imminent risk. Many will accept the idea of sacrifying antitrust regulation in exchange for jobs in the present, since they are not able to understand that a disruption today might bring more jobs in the future than if status quo is maintained.

Thanks a lot for clarifying this!

I sort of agree - but considering that Kaiser's Tengelmann was a much bigger deal in terms of jobs affected than AB (~15,000 vs ~8,000), and public opinion never really supported the Ministererlaubnis at the time, I wouldn't be too worried here, either. Most comments I've read and heard are even critical of the €150m bridging loan, which I don't have much of a problem with.

C010T3 wrote:

It's just weirdly funny how Lufthansa is acting without any scruples. They don't even bother hiding it.

Well, why hide it? They've previously stated already they're very much interested. They've probably done their homework, as well.
That said, they've been in discussions with two others for a good while now as well.

C010T3 wrote:

Thomas Winkelmann's appointment to CEO of Air Berlin was questionable at least. Now having him there during insolvency is an even more of a conflict. What could be seen as collusion before can now transform to something much worse. Any creditor can spot the conflict of interest.

Etihad had to approve Winkelmann.
Also consider that around the time that Winkelmann was appointed in February 2017 (with EY's consent), EY and LH agreed to extend their codesharing agreements.
I'd say there's a pretty good chance that EY saw an easy way out of having to dump more money into AB until June 2018, and got a few codeshares to sweeten the deal.
That said, any bidder is open to submit bids, and as far as I understand, the highest bidder wins, as overseen by the two independent assistant administrators.

C010T3 wrote:

Lufthansa is not interested in putting the company back on its feet

...neither is anybody else, in fairness.

PanHAM wrote:

Misleading statistics

Sorry, but [user]factsonly[/user]'s statistics are not misleading. They are exactly what the antitrust agencies will be looking at, among other things.

PanHAM wrote:

Germany is polycentric with about 220 Million Pax p.a. LH carried soe 110 mio Pax, but including OS and LX. IIRC the LH market share in Germany does ot exceed 40%. It is a wide open and free arket for all.

If you take the number two out of the market and there is such a big gap in size between number one and two, and number two and everybody else, that's always a problem. Instead of looking at LH's market share, you'd have to look at the combined market share of LH and AB, which is ~140m pax in 2016, or just shy of 2/3 of the total market. Things get a lot trickier antitrust-wise at that point. Also, overall market share might be ok still, but market share on some routes isn't.
Don't forget that with the Kaiser's Tengelmann supermarket takeover in 2015, the antitrust agency didn't see a problem with overall market share (KT's was in or around 0.6% Germany-wide), but with market share in specific regions with a heavy KT presence, e.g. Berlin.
In the same vein, expect very close scrutiny to be paid to each individual route, especially those where AB is currently LH's only real competitor.

Consequently, the heads of both the Monopolkommission (monopoly commission) and the Bundeskartellamt (federal antitrust agency) have already stated that any deal LH was to strike would be subject to very close scrutiny, especially with regard to individual routes served.

leghorn wrote:

It will be extremely annoying for the LCCs if they have effectively driven the older legacy carriers out of business in a number of Countries through competition in the marketplace

...and clever use of subsidies for regional airports, pseudo-self-employment of pilots, circumventing or outright violating labour laws, etc. Plus political connections to local politicians. FR had a lot of political (and PR) help initially against the then-evil EI. And again when they tried to snatch Hangar 6 at DUB from EI.
Remember: "Fair competition in the marketplace" is only ever really fair if you're the winner, and if somebody else wins it's because of unfairness and the competition's connections. With FR in particular, expect them to blame anybody and everybody when they're not the winners.
FR are free to put a bid on the table for AB or parts thereof, just like U2 are (allegedly) doing. Instead, they're going about their usual PR tactics of not actually doing anything about the business at hand but being very vocal about how unfairly they are being treated.

Revelation wrote:

Yes, I've expressed doubt earlier that Ryanair would make a viable bid for any of the assets, but still it's interesting that there seems to be little to no concern about "keeping up appearances" with regard to this transaction.

As PanHAM wrote, there are simply not that many airlines to whom AB or parts thereof would be of much interest/use. Note how ABs business model sort of oscillated between being a charter/holiday airline (AB itself and Niki), being a business airline trying to compete with LH, and being Germany's own LCC, while also feeding pax into EY. All of which explains why they're in the mess they're in.
It also means that as a whole, AB is neither viable nor of interest to anybody, and selling some parts to an LCC, some to a legacy/business airline and some to a charter/holiday airline makes complete sense. Nobody expects this to be a winner-takes-all scenario.
Lo and behold, the airlines at the negotiating table are LH (legacy/business), DE (rumoured, charter/holiday) and U2 (rumoured, LCC).
It's also been confirmed that discussions have been held with all three for the last few weeks, and they expect that other interested parties might join negotiations now that insolvency has been declared.

It'll be interesting to see which way AB is going to be split up. That said, I would see LH buying the lion's share. Of course, they have a strategic interest, but they're also the only ones to whom owning the majority of the fleet and slots of AB would make the most sense IMHO. Whether they get those 90 planes they're allegedly interested in, is a different matter.

duboka909 wrote:

German media reports now that even Wöhrl, they guy how owned CityJet, LTU, dba, etc, wants to buy AB with the help of other investors.
http://www.aero.de/news-27294/Woehrl-pl ... erlin.html

He's been quite busy in the aviation industry, but somehow I don't really give this one a lot of credence.

duboka909 wrote:

VolvoBus wrote:

Why do you think the leasing costs will necessarily be lower?

According to Wikipedia, all AB aircraft are leased, so AB is currently bound to pay the contractual rates, which are probably at a rate reflecting their financial position. If AB sub-leases them to LH or U2, then the sub-lease rate reflects the main lease rate. If ,or when, AB is liquidated, then the aircraft return to the lessor, as there is no legal entity as one party to the contract.

LH will renegotiate the leases since they are definitely able to pay them. And the aircrafts AB leased to EW and AU, LH bought them from the lessors and leased them back to AB. With this model, they secured themselves from the risk of an AB bankruptcy because in this case they would have gone back to the lessor and this is LH in this case.

German media reports now that even Wöhrl, they guy how owned CityJet, LTU, dba, etc, wants to buy AB with the help of other investors.

http://www.aero.de/news-27294/Woehrl-pl ... erlin.html

Thanks for the info. Do you know the position regarding the ones AB are still operating themselves ?

anfromme wrote:

Lo and behold, the airlines at the negotiating table are LH (legacy/business), DE (rumoured, charter/holiday) and U2 (rumoured, LCC).
It's also been confirmed that discussions have been held with all three for the last few weeks, and they expect that other interested parties might join negotiations now that insolvency has been declared.

Not sure how credible this is, but https://www.reuters.com/article/us-air- ... SKCN1AX0EZ reports:

"Only Lufthansa will initially be part of the talks ... As far as I know, the other bidders will be invited for talks afterward and then an overall package will be put together," said Lufthansa's deputy chair Christine Behle, who represents labour union Verdi on the company's supervisory board.

First amongst equals, or so it seems...

Revelation wrote:

First amongst equals, or so it seems...

LH was in the talks for the longest amount of time when compared to others like U2. They have been exploring a serious deal with EY for at least one year now, had it not been for the AB debt, AB would have been sold to LH quite some time ago. They will make a better offer than others, in terms of jobs preserved, terms for the airports, the whole nine yards. Does EY, FR or U2 offer that? I doubt it, but if they do, come on in and bid.

LH has done much of their due diligence in sizing up AB over the past 12-24 months, including the already existing lease agreement with AB on these close to 40 frames that they've been wet leasing since the spring. Their EW long haul ex-DUS was specifically designed to compete with AB A330 ops there. They even planned to do another EW long haul hub at BER once that opened, once again going head to head with AB 330 ops. I'm sure they've done analysis on AB assets and weaknesses for several years now, and are thus well positioned to pull the trigger now.

U2 doesn't even have long haul ops, why would they buy A330s? Same for FR with their all Boeing fleet. Never say never, but either one of these purchasing A330s or Q400s would be a stretch of imagination. FR would probably have good cards in the bidding process if it weren't for the lack of job guarantees. U2 probably only wants Niki so badly because of the Brexit, that's not about Niki ops itself, but rather because buying Niki would serve as an accelerator to building an EU carrier while that's still easy to do for U2.

For those who say that German market isn't competitive, it's really an EU market. Last time I checked in at Berlin, I saw tons of low price fares and LCCs. Whatever isn't at TXL is at SXF. Same for DUS, drive to CGN if you don't like DUS prices or carriers. It's like SFO and OAK or NYC area airports or LHR vs STN / LTN, plenty of carriers, something for everyone. To frame it as LH dominance is silly, if prices go too high, then someone new will enter the market, see Norwegian, WOW, XL and Icelandair on TATL prices.

Revelation wrote:

anfromme wrote:

Lo and behold, the airlines at the negotiating table are LH (legacy/business), DE (rumoured, charter/holiday) and U2 (rumoured, LCC).
It's also been confirmed that discussions have been held with all three for the last few weeks, and they expect that other interested parties might join negotiations now that insolvency has been declared.

Not sure how credible this is, but https://www.reuters.com/article/us-air- ... SKCN1AX0EZ reports:

"Only Lufthansa will initially be part of the talks ... As far as I know, the other bidders will be invited for talks afterward and then an overall package will be put together," said Lufthansa's deputy chair Christine Behle, who represents labour union Verdi on the company's supervisory board.

First amongst equals, or so it seems...

LH will probably get the biggest share from AB and to be honest if you represent a labour union you would cherish negotiating with LH first, because it is likely that the employees will get the best deal there, which you then could use as a baseline for the follow on negotiations. But still we have now 4 parties who have expressed interest and started negotiating, FR not so much.

LH's market share at FRA will be a bit lower in percentage once the clown's Airline has based their dozen or so 738s here. But the 2(3 market share of LH has to be seen in total. The KL market share for AMS is more or less the KL market share for the Netherlands, LHs market share for Germany is below 40% and the Monopoly commission must realize that the market is the EU and not single countries or even Metro Areas.

AB has never played the FRA market BZW, they tried it and wasted their ressources. LH on the other side, kept a low flame at Airports where AB dominated..

Interesting read BTW is on airliners.de the chronology of Air Berlins mistakes, the first one was made at the very beginning by operating short hauls with a Long haul 707. Some leaves one speechless.

And, for those here who think that AB is still in the Position to make their own decisions, no, they are not. That goes for the subsidiaries like LGW or Belair or whatever. Every move must be approved by the appointed Administrators. and LH is de-facto in the Drivers seat.

what Iforgot to mention, all contracts, and that includes aircraft Leasing, are Nil and void and subject to re-negotiation. If a lessor does not agree he can take his aircraft. The remaining 737 from TUI Fly will go back to TUI Fly, they will have to see what they do with that fleet. The DH8s will not be taken over either. LH is interested in the 320s and 330s only.

To me it is clear:

- LH will have "preferential access" to slots, leased planes and routes operated by Air Berlin. They will do "cherry picking" with what fits them well.

- In a second round, easyJet will be "invited" to start some domestic routes (e.g. MUC-HAM) in order to create the required competition in order to comply with EU antitrust laws and to keep the German customer happy with some competition.

Well it is not unusual to work with the investor willing to take the largest share first. Yes it is unfortunate that LH will get even more domination in the German market, but it is up to the competition to fight them over the remains of AB. But so far nobody is trying and insolvency law is quite clear, if it is possible to get some money for the operation and transfer employees to an investor, the process can not end with an auctioning of all the slots, because this would be a part the full liquidation which can only happen if no investor is found.

Shame. I remember when they started flying from Stansted to Nuremberg. I took one of the very first flights and they were always great. I used to fly with them to Dusseldorf monthly too around that time.
They changed a lot after mainly with the acquisition of LTU.
It is concerning for the German Market. Correct me if I am wrong but German Wings/Eurowings already belong to Lufthansa and other airlines flying within Germany are only peripheral so I do see a monopoly from Lufthansa which is not good for the market.
As for the possibility of IAG to consider a purchase, another Deutsche BA?? I am not sure they would entertain that...
Some say it was poor management. It might be but I also feel that Lufthansa has way too much power and this may prevent other airlines to form and prosper. Do not count Eurowings/Germanwings or Austrian or Swiss since they are, in the end the same airline flying with different brands to say the least. They are independent but only to a certain point.

Eurowings has announced 4 daily CGN-MUC starting S18.

http://www.routesonline.com/news/38/air ... f-17aug17/

Munich – Cologne eff 25MAR18 4 daily A319 (operated by germanwings)

It repeats itself, when LH aquired SR the m&m commissio reuqted that LH gave Slots away. AB was one of the competitors. We made a day trp to ZRH on am AB 319. 19 was the headcount and it wasn't much moreon the return flight in the evening. Same with OS, Adria airways flew 2 daily Returns FRA-VIE with crj. They could do that only because These flight wee bookable on LH.As flights from FRA are mainly leisure flights after they Ave up ZRH HAM etc.A hub is a fortress when it works and the market share is created by the hub carrier himself. Take the hub away from FRA and the Airport wouldn't be half the size. The competition in Germany is HSR on the domestic and to Paris, Brussels and Amsterdam.

Revelation wrote:

It will be interesting to see how happy the people who are supporting this LH take over of AB assets will be when the inevitable strikes happen:

Lufthansa's interest in Air Berlin has also upset its own staff.

At its Eurowings subsidiary, unions are balloting cabin crew about industrial action after pay talks broke down - something the unions blame on Air Berlin's collapse.

German cabin crew union UFO said: "The reasons why no solution could be worked out with Eurowings management became clear yesterday: the Lufthansa group can obtain cheap aircraft through Air Berlin's insolvency and doesn't need to take on its staff or their wage agreements."

Ref: http://www.bbc.com/news/technology-40949243

A few strikes here and there, European countries have to deal with it from time to time. Looking at the long-term view this Air Berlin insolvency will be forgotten soon and LH will be an even more powerful company.

Revelation wrote:

anfromme wrote:

Lo and behold, the airlines at the negotiating table are LH (legacy/business), DE (rumoured, charter/holiday) and U2 (rumoured, LCC).
It's also been confirmed that discussions have been held with all three for the last few weeks, and they expect that other interested parties might join negotiations now that insolvency has been declared.

Not sure how credible this is, but https://www.reuters.com/article/us-air- ... SKCN1AX0EZ reports:

"Only Lufthansa will initially be part of the talks ... As far as I know, the other bidders will be invited for talks afterward and then an overall package will be put together," said Lufthansa's deputy chair Christine Behle, who represents labour union Verdi on the company's supervisory board.

First amongst equals, or so it seems...

Lufthansa is not going to take the entire company. Right now it just want 90 of the 140 airplanes. Hence there is room for more airlines to take a slice of the pie.

Jomar777 wrote:

It is concerning for the German Market. Correct me if I am wrong but German Wings/Eurowings already belong to Lufthansa and other airlines flying within Germany are only peripheral so I do see a monopoly from Lufthansa which is not good for the market.
... It might be but I also feel that Lufthansa has way too much power and this may prevent other airlines to form and prosper.

So how exactly does this differ from the dominance that BA, AF or IB have in their home markets? They have also taken over smaller airlines in the same country (BMI for BA, Air Inter for AF), and still the markets there didn't collapse.

Revelation wrote:

PanHAM wrote:

A Transport Minister is just doing his Job, what do you guys expect? Him saying we rather had preferred BA?

There is something to be said for diversity in the air transport sector. Instead it seems to be politically expedient to favor the "champion" LH.

Diversity? As someone else already pointed out, there are just too many airlines in Europe. It's time for some market consolidation.

mercure1 wrote:

Lets face it. We have too many airlines in Europe and require market consolidation.

OlafW wrote:

Jomar777 wrote:

It is concerning for the German Market. Correct me if I am wrong but German Wings/Eurowings already belong to Lufthansa and other airlines flying within Germany are only peripheral so I do see a monopoly from Lufthansa which is not good for the market.
... It might be but I also feel that Lufthansa has way too much power and this may prevent other airlines to form and prosper.

So how exactly does this differ from the dominance that BA, AF or IB have in their home markets? They have also taken over smaller airlines in the same country (BMI for BA, Air Inter for AF), and still the markets there didn't collapse.

The problem is that this is not a hostile take over or a merger but an insolvency. So any competitor is free to bid for the remains of AB, if they choose not to and LH is willing to pay for it there is no legal reason to stop the process, although it will mean that authorities will demand that LH will give up some of the combined slots for being allowed to take over large parts of AB.

Etihad had to approve Winkelmann.
Also consider that around the time that Winkelmann was appointed in February 2017 (with EY's consent), EY and LH agreed to extend their codesharing agreements.

Which shows IMO that this deal was already made between LH & EY back in february, we are simply just seeing it come out now. Why else would EY willingly accept a Trojan horse, if not because LH was offering them a way out of AB?

By the way, it was also said back then that LH would -buy- 15 of the 38 wet-leased aircraft from the lessors, and lease them back to AB(!). Has any of this formally happened already?
https://www.trend.at/wirtschaft/lufthan ... ge-7971305

U2 probably only wants Niki so badly because of the Brexit, that's not about Niki ops itself, but rather because buying Niki would serve as an accelerator to building an EU carrier while that's still easy to do for U2.

Not anymore, as U2 have set up their own Austrian AOC now. But it would be easy to fold Niki into it.
Everybody keeps talking about U2... yet I have yet to hear one public statement from them about their interest in AB. To me, U2 has simply been "invited" to the party in the last minute, to calm concerns about competition. They will be offered whatever LH doesn't want to take, or whatever the EU forces LH to sell off. I doubt that they are freely bidding on AB assets.

As for market competition... let's go one by one:

Don't forget that with the Kaiser's Tengelmann supermarket takeover in 2015, the antitrust agency didn't see a problem with overall market share (KT's was in or around 0.6% Germany-wide), but with market share in specific regions with a heavy KT presence, e.g. Berlin.
In the same vein, expect very close scrutiny to be paid to each individual route, especially those where AB is currently LH's only real competitor.

Indeed, this is less about overall market share than individual routes and markets. Germany domestic would become a LH group monopoly, and in all the major German-speaking airports, LH Group would have >50% market share. It would be particularly critical in DUS and MUC, which don't have free slots to offer. Germany-EU, outside of MUC and DUS, would be less problematic.

For those who say that German market isn't competitive, it's really an EU market. Last time I checked in at Berlin, I saw tons of low price fares and LCCs. Whatever isn't at TXL is at SXF. Same for DUS, drive to CGN if you don't like DUS prices or carriers. To frame it as LH dominance is silly, if prices go too high, then someone new will enter the market

But someone new can only enter the market -if- there are slots available. Not the case at DUS, MUC or TXL. Berlin (TXL-SXF) doesn't have much room to offer until BER opens (and then, only if TXL stays open), but U2 has a big enough presence in SXF to provide a counterbalance, so let's say that one is OK. CGN is an alternative for some in the metro area, but there is a reason most go to DUS. For MUC, there is simply no alternative whatsoever. It's not just an EU market. It is more complex than that.
And with LH group controlling >50% of very major German-spekaing airport, if you want to avoid high prices at a LH-dominated airport, you will have the option to drive to...another LH-dominated airport.

The KL market share for AMS is more or less the KL market share for the Netherlands, LHs market share for Germany is below 40% and the Monopoly commission must realize that the market is the EU and not single countries or even Metro Areas.

The NL is small enough that there is no domestic air travel... and country-wide market shares are not of concern here, but rather market shares in individual markets, and on specific route pairs.

So how exactly does this differ from the dominance that BA, AF or IB have in their home markets?

In France, U2 and HSR provide domestic competition. Spain... is arguably the most competitive domestic market in Europe. UX, FR, and HSR all give IB plenty of headaches. BA also has at least a little bit of domestic competition, and it is not a big domestic market anyway in comparison.
In Germany, AB is the only domestic competitor to LH (with the exception of FR on CGN-SXF).

And the trains as well.

KarelXWB wrote:

A few strikes here and there, European countries have to deal with it from time to time. Looking at the long-term view this Air Berlin insolvency will be forgotten soon and LH will be an even more powerful company.

Yes, it is a great turn of events for LH: EY and the German government in effect has financed the process wherein a long term competitor has trimmed itself down and its best remaining assets are being delivered to LH. It's kind of a kharmic payback to LH for delivering BMI on a silver plate to BA!

KarelXWB wrote:

Lufthansa is not going to take the entire company. Right now it just want 90 of the 140 airplanes. Hence there is room for more airlines to take a slice of the pie.

Yes, the best assets are being cherry picked, and a bunch of experienced workers are coming into their low-cost operation on favorable contracts. It's a wonderful day for LH! Unless you are suggesting LH are idiots and are taking the worst assets...

KarelXWB wrote:

Diversity? As someone else already pointed out, there are just too many airlines in Europe. It's time for some market consolidation.

Great! We shall have no more complaining on a.net when a powerful airline uses bankruptcy proceedings to cherry pick the assets of a competitor.

Up next: Since national champions are such a good thing, Germans decide to stop financing the Spanish and Italians and we have Grexit!

factsonly wrote:

Revelation wrote:

It will be interesting to see how happy the people who are supporting this LH take over of AB assets will be when the inevitable strikes happen:

Some interesting 2017 statistics on LH dominance at FRA, compared to its European rivals:

Take a look at Home Carrier market share of total seats at the four major EU Hubs:

1. FRA - LH offers 64.5% of all available seats at FRA airport
2. CDG - AF offers 51.5% of all available seats at CDG airport
3. AMS - KL offers 48.3% of all available seats at AMS airport
4. LHR - BA offers 47.8% of all available seats at LHR airport

Perhaps FR (and others) should be concerned about further consolidation of the German air travel.

Interesting reading:
http://www.anna.aero/2017/08/16/europes ... than-2007/

These facts from factsonly highlights the key issue of the LH dominance at FRA, which was already in 2017 grossly excessive, when compared with CDG, AMS and LHR.

As well as dominating FRA, LH presumably also holds the dominant position in Germany, has anyone the facts on this?.

Presumably the LH dominance will be even greater when the any slots pass from Air Berlin to LH? Has anyone the facts on this?

In the UK, a market share of 40% puts the competition authorities in a position to require change. No doubt when LHR's 3rd Runway arrives, the authorities will act by ensuring new slots are shared.so as to reduce the IAG dominance, whist allowing them to grow much bigger if they wish to.
.

And the trains as well.

As I have said in earlier posts, rail is not a competitor in Germany on "long" routes. And particularly not on the core routes between HAM/MUC/TXL/STR, which would be the most affected by a full LH takeover.
The HSR rail networks in France and Spain are designed for long distance travel to compete directly with air. In Germany, the high-speed-in-some-places network is designed more for medium distances, where air wouldn't make much sense anyway.

HAM-BER is surely seeing competition from the train.

Revelation wrote:

Yes, it is a great turn of events for LH: EY and the German government in effect has financed the process wherein a long term competitor has trimmed itself down and its best remaining assets are being delivered to LH. It's kind of a kharmic payback to LH for delivering BMI on a silver plate to BA!

The only one to blame is Air Berlin itself. They haven't really been profitable (see slide below).

Companies with this kind of losses should be liquidated.

Yes, the best assets are being cherry picked, and a bunch of experienced workers are coming into their low-cost operation on favorable contracts. It's a wonderful day for LH! Unless you are suggesting LH are idiots and are taking the worst assets...

First come, first served I's guess.

Great! We shall have no more complaining on a.net when a powerful airline uses bankruptcy proceedings to cherry pick the assets of a competitor.

It's a smart move and everyone else would do the same if they had the chance. History is full with similar examples.

r2rho wrote:

someone new can only enter the market -if- there are slots available. Not the case at DUS, MUC, TXL

Acquiring AB DUS assets LH Group will have a monopoly for flights to TXL, GVA, FLR, VCE, SZG. Examples of market share % increases: PMI 32.1 > 73.2 / ZRH 34.3 > 71.6 / BCN 28.3 > 77 / AGP 25.8 > 72.8 / FCO 25 > 75

What will happen the Dash-8 fleet of LGW? IMO that's a hidden gem for cheap domestic connections. There surely must be someone interested? Flybe perhaps?

don't they belong to GE Capital?
http://www.flugrevue.de/zivilluftfahrt/ ... lin/666812