German flag carrier Lufthansa is to take over control of Eurowings and its low-cost subsidiary germanwings after winning approval for the deal from the European competition authorities.
Lufthansa will acquire the majority voting rights in the German regional, although its shareholding will remain at 49%. An agreement with the majority shareholder of Eurowings Albrecht Knauf, who holds the other 51% of shares in the carrier, will enable Lufthansa to exercise slightly more than 50% of Eurowings voting rights, according to Lufthansa.
As part of the agreement the carriers will make available slots on the Cologne-Vienna, Stuttgart-Vienna and Stuttgart-Dresden routes “to any new competitor that is willing to fly any one of those routes, but is unable to acquire the necessary slots under normal slot allocation practice”, says Lufthansa.
These routes were identified by the European Commission as services where there would be competition concerns. It says relinquishing the slots will give rise to a deal that “would not significantly impede effective competition”.
Andrew Lobbenberg, financial analyst with ABN Amro, is doubtful whether the deal will have a significant effect on the market. “Before the deal 90% of Eurowings flying was done with the Lufthansa codeshare on it anyway,” he says. “It is not going to make a vast strategic difference.”
Approval was granted despite protests from low-cost rival easyJet, which is threatening to file a complaint with the European Court of Justice in view of Lufthansa’s dominant position in the German market. Lufthansa and its partners already have 57% of the German market, says easyJet.
Lufthansa took a stake in Eurowings in December 2000, when it acquired 24.9% of the carrier. This was increased to 49% in April 2004. Germanwings was launched in late 2002 to compete in the low-cost sector. ■
JACKIE THOMPSON / LONDON
Source: Airline Business
