airberlin still on the expansion trail

Air Berlin Profile

It follows a report which stated the fast-growing carrier was intent on provoking the Federal Cartel Office into rejecting the application by its "lack of co-operation". airberlin also rejected allegation that airberlin could no longer afford to purchase Condor, on account of the ongoing weakness in the airline’s share price.

airberlin plans to plans to purchase a 75.1% shareholding in Condor from Thomas Cook, which also involves Thomas Cook acquiring a 24.9% shareholding of Condor from Lufthansa. As per the agreement, Thomas Cook will then acquire a 30% stake in airberlin.

(Lufthansa is linked by the media with virtually every rumoured and actual airline sale in Europe at the moment – the latest being Brussels Airlines and bmi. Lufthansa has also confirmed this week it is yet finalise an agreement to merge its Germanwings budget airline with TUI Travel Plc's TUIfly).

The acquisition of Condor will make airberlin the fifth largest European airline, with a combined fleet of 166 aircraft (plus 25 B787s currently on order). Synergies from the Condor takeover are expected to be at least EUR70 million p/a.

airberlin, has become Europe’s third largest LCC, following an acquisition strategy that has seen the Group expand to include LTU, dba, Belair and NIKI. But airberlin recently acknowledged integration problems and last month lowered its profit outlook for this year because of rising fuel costs and the delay in expected synergies to be realised from its takeover of LTU.

In a positive integration step however, airberlin has recently signed a ten-year collective salary agreement with pilots’ union, Cockpit, effective retroactively from 01-Apr-08. The agreement covers the terms of employment based on current salary arrangements for airberlin, and standardises the regulations for promotion and cross-training programmes within the Group.

But the airberlin group’s outlook remains clouded by the extremely high fuel prices and the costs of funding - and challenges of managing – carrier integration follows its acquisition spree.

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