Andrew Doyle/DÜSSELDORF
SAirGroup has finally completed its long-awaited acquisition of a 49.9% stake in German tour operator LTU as the latest step in its plans for a major expansion of its operations in the European leisure travel market.
The deal comes as senior executives at the Swissair parent are expressing optimism that a bilateral transportation agreement between Switzerland and the European Union (EU) could be implemented as early as 2001, although SAirGroup would not gain full access to the liberalised air market until at least 2003.
LTU, which comprises six tour operator brands and one of Europe's largest charter airlines, will become part of SAirGroup's fast-growing "European leisure travel grouping". This already includes Swissair affiliate Balair/ CTA, Sabena's Sobelair charter unit and Italy's Air Europe, in which the Swiss company recently acquired a 45% stake. SAirGroup chairman, Dr Hannes Goetz, says: "We are adding another level to our system of alliances. We want to establish a European leisure network because this sector has above-average growth potential."
The transaction will see SAirGroup transferring its shares into a new, wholly owned subsidiary called LTU Holding. Next year the remaining 50.1% - owned by German investors and Westdeutsche Landesbank, which is reducing its stake from around one-third to just over 10% - will also be put into LTU Holding, diluting SAirGroup's stake to just under half. Competition watchdogs forced Westdeutsche Landesbank to dispose of its shareholding following its acquisition, through its affiliate Preussag, of a stake in rival Hapag Lloyd earlier this year.
SAirGroup says it can exploit "synergies" among the charter carriers in areas such as catering and technology, as well as fleet harmonisation. All already operate Boeing 767-300ERs except Balair, which it will introduce the type next year in place of its Airbus A310s. LTU also has 757s and Airbus A330s, which will remain in the fleet for the foreseeable future, says SAirGroup.
Meanwhile, Goetz says he is optimistic that EU ministers will approve a bilateral transport agreement with Switzerland by early next year, clearing the way for it to be implemented as early as 2001. This would eventually grant SAirGroup full access to the EU air transport market and allow it to hold majority stakes in EU airlines.
"We hope very much that towards the end of the year the EU Council of Ministers will agree on the concept worked out by the European Commission and the Swiss Government," says Goetz. "Then it has to go through the EU parliaments.
"It looks as if we will obtain third and fourth freedoms immediately and fifth, sixth and seventh freedoms have to be negotiated two years later." Third and fourth freedom rights would still only allow Swiss carriers to carry passengers from their home country to other EU states, but with no restrictions on frequency.
The Swiss Federal Office for Civil Aviation (OFAC), a branch of the transport ministry, confirms that agreement has been reached with the EC whereby Swiss airlines will get third and fourth freedoms for the first two years following implementation of the bilateral, after which they will gain the same traffic rights as EU carriers.
Source: Flight International
