Although it might not seem like it, this is a pretty big deal for EasyJet. Buying a chunk of Air Berlin will give it greater exposure to Europe's biggest economy, helping it to catch up with rival Ryanair.
EasyJet will pay 40 million euros ($46 million) for the Airbus SE A320 aircraft leases and takeoff and landing slots at Berlin Tegel Airport, the Luton, England-based discount carrier said Friday in a statement. It also has launched a recruitment campaign to attract about 1,000 of Air Berlin’s pilots and cabin crew. The deal is subject to regulatory approval.
“This will enable EasyJet to operate the leading short-haul network at Tegel connecting passengers to and from destinations across Germany and the rest of Europe,” the company said. “This is in addition to EasyJet’s existing base at Berlin Schoenefeld and would mean that EasyJet would be the leading airline in Berlin.”
The deal bolsters EasyJet’s presence in Europe’s largest economy and shores up a front against the region’s biggest discounter, Ryanair Holdings Plc. Both carriers have bases at Schoenefeld airport in the east of the German capital city, while Air Berlin’s main hub was at Tegel in the west, closer to federal government offices. Ryanair Chief Executive Officer Michael O’Leary decided against bidding for Air Berlin assets, complaining that administration proceedings were a “stitch-up” between Germany’s government and the country’s dominant mainline carrier, Deutsche Lufthansa AG.
Acquiring parts of Air Berlin would help EasyJet make up lost ground in Germany, where it lags well behind Ryanair. The U.K. company announced in June that it will shut a base in Hamburg, where it stations four A320-series planes, at the end of the summer 2018 season, leaving only its Berlin operation, which utilizes 12 aircraft. Ryanair flies nine planes out of Berlin, and has nine other German bases, including Cologne-Bonn, Hamburg and Frankfurt.
A 210 million-euro, 81-aircraft agreement that Lufthansa reached on Air Berlin assets in mid-October is likely to face European Union antitrust scrutiny, the head of Germany’s Federal Cartel Office has said. Lufthansa Chief Executive Officer Carsten Spohr estimates that integrating Air Berlin operations will take at least 12 months and cost a total 1.5 billion euros.
Air Berlin filed for insolvency administration in August when its main shareholder, Abu Dhabi-based Etihad Airways PJSC, halted support after years of losses at the German carrier. Lufthansa, EasyJet and Ryanair are circling the remains of another failed investment by the Persian Gulf airline: Rome-based Alitalia, which began bankruptcy proceedings in May.
EasyJet also has its eyes on failed U.K. competitor Monarch Airlines Ltd., which operated 35 aircraft to destinations such as Spain and Portugal, and folded in early October, leaving vacant takeoff slots at EasyJet base airports including Luton and London Gatwick.
©2017 Bloomberg L.P.
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Photo credit: An easyJet aircraft. The UK-based carrier's deal for a portion of bankrupt Air Berlin will see it greatly increase its presence in Germany. Bloomberg