Air Berlin buys competitor LTU for 140 million euros
Air Berlin has bought its competitor LTU for 140 million euros and has taken on debts of up to 200 million euros owed by the company. The deal is waiting for the go ahead by the German antimonopoly authority.
Air Berlin is planning to finance the take over by selling more shares and taking out a loan of around 250 million euros. A company spokesperson stated that the extra shares would be equal to 10% of its total shares and that most of the money would consist of a convertible loan.
LTU will continue to operate as an independent company under its own management and will keep its own logo in the medium term while its European routes are incorporated into Air Berlin’s own network of routes.
Air Berlin calculates that the operation will produce annual takings of between 70 to 100 million euros taking into account the savings in costs by merging activities such as sales and by combining the two fleets of planes.
The deal means that Air Berlin will become Europe’s fourth largest low cost airline in Europe following Ryanair, Air France/KLM and Lufthansa.
According to Air Berlin LTU operates 15 medium distance flights and 11 long haul flights to destinations such as The Dominican Republic, the US, Thailand, the Canary Islands, Turkey and North Africa. Last year it carried 5.3 million passengers and had over 2000 employees. On the other hand, Air Berlin carried 16.8 million passengers in 2006 and had 4000 employees. It had a fleet of 93 planes all operating on European or North African routes.
Last year Air Berlin took over an airline called dba in order to set up a large low cost company with domestic and international flights. Following this takeover Air Berlin operates more than 600 routes everyday.
Air Berlin’s President, Joachim Hunold, defended the deal saying that his company was responding to market forces.