August 21, 2017 / 8:52 AM / a year ago

Lufthansa gets backing from Economy Minister in Air Berlin carve-up

BERLIN (Reuters) - Lufthansa (LHAG.DE) has received more German government support in its bid to take over substantial assets of insolvent rival Air Berlin AB1.DE, with German Economy Minister Brigitte Zypries saying she would welcome such a move.

“Lufthansa is already an aviation champion - its position can be strengthened further though,” she was quoted saying by German daily Handelsblatt on Monday.

However, a spokesman for the ministry later attempted to play down the remarks, saying it had no preferred bidder. Industry rivals have voiced concerns at the way the insolvency process is being handled.

“Air Berlin is leading the negotiations,” the spoksman said. “The government is not at the table. And the government is neither for nor against any of the interested parties.”

Lufthansa, Germany’s top carrier, cannot buy all of Air Berlin because it would give it a dominant position in Germany. But Lufthansa is first in line for talks, ahead of other potential bidders.

Ryanair (RYA.I) boss Michael O’Leary has already complained that the process is going too quickly to give others a chance to bid.

EasyJet (EZJ.L), Thomas Cook’s (TCG.L) German airline Condor and tour operator TUI (TUIT.L) could also be among the interested parties.

FILE PHOTO: Passengers board an Air Berlin aircraft at Tegel airport in Berlin, Germany, June 14, 2017. REUTERS/Hannibal Hanschke/File Photo

Buying parts of Air Berlin and taking on its staff would give successful bidders access to Air Berlin’s takeoff and landing slots at busy airports such as Duesseldorf and Berlin.

With many Germans away on their summer holidays and a September election looming, Berlin has granted a bridging loan of 150 million euros (136.49 million pounds) to keep Air Berlin’s planes in the air for up to three months and secure 7,200 jobs in Germany while buyers for its assets are found.

A creditors’ committee, which will have to agree any sale, is due to meet for the first time on Wednesday, two sources said, although no major decisions are expected.

The committee includes representatives from the federal labour office, which is currently paying Air Berlin staff wages, Commerzbank and Lufthansa, which is leasing 38 crewed planes from Air Berlin.

Chief Executive Thomas Winkelmann was quoted as saying over the weekend that he hoped for a solution in September.

Winkelmann said Air Berlin had been in talks with more than 10 parties but ultimately the assets would likely be divided up among two or three buyers.

Austrian leisure airline Niki, which is owned by Air Berlin but not part of the insolvency proceedings, is also seen as attractive because it has lower costs.

Businessman Hans Rudolf Woehrl, who sold airlines DBA and LTU to Air Berlin a decade ago, is also interested, but has said he wants to buy Air Berlin as a whole and keep it running as an independent airline.

Reporting by Victoria Bryan; Additional reporting by Alexander Huebner and Gernot Heller; Editing by David Holmes and Keith Weir

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