Air Berlin has agreed to acquire German leisure carrier LTU for €140 million ($187 million) plus the assumption of €190-200 million in debt.
The deal gives Air Berlin a long-haul network for the first time and more access to congested Düsseldorf airport. LTU's owner Intro, which sold German low-cost carrier dba to Air Berlin last year, had been looking for a strategic partner for LTU for several months and held talks with several potential investors.
"With the acquisition of LTU we are reacting to demands from the market," says Air Berlin chief Joachim Hunold (see page 30). "Many of our customers have been asking us for years to start offering long-haul flights. This is now possible for us as we have the necessary feeder network through our European and domestic German connections."
He says the deal will give Air Berlin valuable increased access to Düsseldorf, which he says has the most important catchment basin in Germany. "We would not have been able to grow at this airport organically owing to the limitation of departure slots," says Hunold.
The deal will create Europe's fourth-largest airline group in terms of traffic, with 120 aircraft. Air Berlin and LTU carried 22.1 million passengers last year.
Düsseldorf-based LTU operates 11 Airbus A330s to long-haul holiday markets. It also has 15 narrowbodies serving European charter routes. LTU will retain its name, at least for the foreseeable future. Its routes will be integrated into Air Berlin's European network.
Air Berlin expects to generate savings of €70-100 million by integrating LTU into its operations, but no immediate job cuts are expected. It plans to finance the acquisition, which is still subject to regulatory approval, by raising €250 million through a combination of new equity and convertible bonds.
The proceeds from this arrangement will also be used to refinance about €100 million of LTU's debt and €50 million of Air Berlin's own debt.
Meanwhile, Air Berlin has disclosed plans to acquire a 49% shareholding in Swiss charter carrier Belair, owned by tour operator Hotelplan. Belair operates three aircraft primarily to Mediterranean destinations.
Source: Airline Business
