December 1, 2017 / 8:10 AM / in a year

Lufthansa offers EU concessions over Air Berlin asset buy

BRUSSELS (Reuters) - Lufthansa has offered concessions to ease EU concerns about its plan to buy Air Berlin assets, aiming to avert a collapse of the deal that could unravel the insolvent carrier’s carve-up.

A Lufthansa Airbus A321-200 plane is seen at Tegel airport in Berlin, Germany, November 2, 2017. REUTERS/Axel Schmidt

The European Commission, which is concerned about Lufthansa’s potential dominance in Germany as a result of the plan, said on Friday it had extended its deadline for a decision on the deal to Dec. 21 from Dec. 7.

Air Berlin filed for insolvency in August and was subsequently carved up, with Lufthansa buying Niki and LG Walter (LGW), plus some short-haul planes, for 210 million euros (£185 million) to expand its Eurowings budget brand.

Britain’s easyJet is taking on some Air Berlin operations at Berlin’s Tegel airport.

However, the Lufthansa deal has come under fire from airlines and consumer groups who fear it will give Germany’s flagship carrier dominance of German domestic routes and in Austria.

The EU Commission did not provide details of Lufthansa’s proposal, but it had previously determined that Lufthansa, Niki and LGW’s activities overlap on more than 100 routes, which means that remedies would have to be significant.

A source familiar with the matter told Reuters on Thursday that the airline was willing to cede slots belonging to Air Berlin businesses Niki and LGW.

If the EU launches an in-depth probe of the deal, pushing any approval well into 2018, the whole transaction could be called off as Lufthansa has said its financial planning only anticipated pumping money into the ex-Air Berlin flight operations until the end of this year.

That also calls into question whether and how the German government will be repaid a 150 million euro ($178 million) loan it granted to Air Berlin when the carrier filed for insolvency, to prevent its planes from immediately being grounded.

“Of course we still expect that the loan will be repaid,” a spokesman for the German economy ministry said on Friday.

It is also unclear whether Austria’s government would still stand ready to provide bridge loans to Austrian unit Niki if necessary, following parliamentary elections in October that are set to bring a change in government.

The chief of Niki’s workers’ council, Stefan Tankovits, told Oe1 radio on Friday it was hard to tell whether the offer of a government loan still stood.

Austria’s chancellery and infrastructure ministry said the preference was to save jobs but both ministers, who hail from the outgoing Social Democrats, have limited influence on future decisions.

The conservative-controlled finance ministry and the Freedom Party, which is likely to enter government with the conservatives, had no immediate comment.

Former motor racing driver Niki Lauda, who founded the Niki business, and Thomas Cook’s airline Condor had offered around 100 million euros to buy Niki plus 17 aircraft. British Airways owner IAG had also made a bid for the unit.

Both Thomas Cook and IAG have declined to comment on whether they are still interested in Niki.

Additional reporting by Shadia Nasralla in Vienna, Alistair Smout in London and Klaus Lauer in Berlin; Editing by Mark Potter and Susan Fenton

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