Creditor Talks

Seeking a Speedy Breakup

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Thomas Winkelmann (right), now CEO of Air Berlin, is in talks with Lufthansa CEO Carsten Spohr, who used to be his boss. Source: Reuters

With bankrupt Air Berlin burning through the €150 million ($177 million) cash injection from the German government, the airline’s creditors will meet Wednesday to discuss the breakup of the company. Lufthansa, the national carrier, looks likely to take over most of the company’s planes and employees, but may have to sell some takeoff slots to other airlines to satisfy antitrust concerns.

“We’re under great time pressure,” Air Berlin CEO Thomas Winkelmann told Handelsblatt. “It’s no secret that an airline in bankruptcy burns through money. That’s why the talks are taking place around the clock.”

Mr. Winkelmann, who formerly headed Lufthansa subsidiary Germanwings,  said that the talks involve Lufthansa and two other interested parties, whom he did not name. However, Reuters news agency said they were British low-cost airline easyJet and TUI Group’s TUI fly.

“We need a quick solution, not least because there are 8,000 jobs at stake.”

Thomas Winkelmann, Air Berlin CEO

EasyJet’s primary interest is to buy the airline’s valuable departure slots at Berlin Tegel airport as well as those in Düsseldorf. “The goal has been to keep out Ryanair,” Reuters quoted a person familiar with the talks as having said. Ryanair is a budget Irish airline that competes with easyJet in Europe.

Thomas Cook’s German airline Condor has also expressed an interest in playing a role in the breakup of Air Berlin.

Another potential investor, Hans Rudolf Wöhrl, who famously bought British Airways’ failing German subsidiary for just €1, has said he would like to buy the entire airline as a unit and keep it operating, but German government officials said they doubted that would be possible.

Mr. Winkelmann said he expected to have a final deal in place by the end of next month, when the German government’s injection of aid is expected to run out. The government bailout of Air Berlin was designed to prevent thousands of German tourists being left stranded at summer vacation destinations, but Ryanair complained to European antitrust regulators that the government had broken the law governing state aid.

Air Berlin is one-third owned by Etihad Airlines of Abu Dhabi. Air Berlin filed for insolvency a week ago after Etihad refused to fund for any more losses.

Mr. Winkelmann has known of the airline’s perilous finances since taking over as CEO earlier this year and has been publicly trying to arrange a marriage with another company. He has been in talks with Lufthansa for several months. Economics Minister Brigitte Zypries told Handelsblatt that the government would welcome a takeover by Lufthansa.

Lufthansa CEO Carsten Spohr has presented his company’s supervisory board with a plan that would have the German flagship carrier taking over 90 of Air Berlin’s 130 jets, for use by its low-cost subsidiary Eurowings. That would include 38 aircraft Lufthansa is already leasing from Air Berlin and its Austrian subsidiary, Niki, which is not a party to the bankruptcy.

Eurowings is thought to be especially keen to get its hands on 17 Airbus A330-200s now operated by Air Berlin because the airline has ambitions to add long-haul routes, which the planes are capable of flying.

If the Lufthansa acquisition goes ahead, the airline may be forced to sell slots in Berlin and Düsseldorf because it already has a large number of slots at those airports and buying more might lead to accusations of monopoly behavior.

Air Berlin’s long-haul slots in Düsseldorf are particularly attractive to airlines like easyJet and Ryanair, which are limited at major airports.

Mr. Winkelmann denied Mr. Wöhrl’s accusations that the airline had kept the insolvency a secret to the last minute, pointing out that he has been publicly seeking a partner since February and that a data room designed to facilitate an acquisition was used by 10 firms since opening in May.

“We need a quick solution,” Mr. Winkelmann, “not least because there are 8,000 jobs at stake.”

 

Jens Koenen leads Handelsblatt’s coverage of the aviation and space industry. Daniel Delhaes reports on politics, transport and airlines from Handelsblatt’s Berlin office. To contact the authors: koenen@handelsblatt.comdelhaes@handelsblatt.com. This story was adapted for Handelsblatt Global by Charles Wallace. 

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