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Court Rules easyJet And Lufthansa Can Buy Air Berlin’s Assets

LOT Polish Airlines has failed in its bid to stop easyJet and Lufthansa from buying former Air Berlin assets. On Wednesday, the European General Court found easyJet and Lufthansa did not get an unfair market advantage by buying the assets.

Lufthansa and easyJet have won a four-year battle to acquire Air Berlin assets. Photo: Getty Images

Lufthansa & easyJet take former Air Berlin planes, employees, and slots

Air Berlin filed for bankruptcy in August 2017 and ceased flying two months later. Lufthansa and easyJet promptly moved to buy Air Berlin assets and hire Air Berlin staff.

According to Reuters, easyJet paid US$46.5 million to buy some of Air Berlin’s operations at Tegel airport, leases for up to 25 Airbus A320 aircraft, and hired around 1,000 former Air Berlin’s pilots and cabin crew.

Lufthansa paid $248 million to take over leases on 80 of Air Berlin’s 130 planes and crew from Air Berlin’s LGW subsidiary. However, Lufthansa was required to surrender some slots at Dusseldorf as part of the deal. The two airlines also picked up Air Berlin slots at Zurich, Hamburg, Munich, and Stuttgart airports.

All up, around half of Air Berlin’s approximately 8,000 employees found work at either easyJet or Lufthansa.

Air Berlin had around 130 mostly leased planes and 8,000 employees when it failed. Photo: Getty Images

European airlines unhappy about the deals

But several European airlines expressed unease over the deals, suggesting it would allow easyJet and Lufthansa to become too dominant in Germany. Ryanair’s Michael O’Leary said the Lufthansa deal was a “stitch-up” that would see Lufthansa own 95% of the German domestic market.

Willie Walsh, then boss of British Airways’ owner IAG, said he had significant concerns about the deal. But the European Commission approved the deal later in 2017. That resulted in LOT Polish Airlines suing the commission in the General Court. LOT said the transactions broke the EU’s rules governing fair competition.

Over three years later, LOT got a result on Wednesday, and it wasn’t what the airline hoped for.

“The General Court dismisses the actions of Polskie Linie Lotnicze ‘LOT’ against the Commission decisions authorizing the mergers concerning the acquisition by easyJet and Lufthansa, respectively, of certain assets of the Air Berlin group,” the judgment read.

The General Court found Lufthansa and easyJet would not gain unfair market advantages by buying Air Berlin’s assets, noting the European Commission had a “margin of discretion” when ruling on complex economic transactions like the disputed Air Berlin deals.

The court said the slots acquired by easyJet and Lufthansa did not give either airline an unfair advantage and said the airports where the two airlines gained the slots – Dusseldorf, Zurich, Hamburg, Munich, Stuttgart, and BerlinTegel, were relatively uncongested.

easyJet Berlin Getty
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Slots behind Air Berlin’s value

Lufthansa CEO Carsten Spohr was confident from the outset. In 2017, he dismissed complaints from rivals like Michael O’Leary. Rejecting market dominance claims, Mr Spohr said even if Lufthansa acquired all of Air Berlin’s market share, an expanded Lufthansa would still command less than half the German domestic market.

When Air Berlin failed, it was Germany’s second-biggest airline with a 14% domestic market share. Air Berlin was one of Etihad’s now fabled bad airline investments. The Abu Dhabi-based airline was the biggest shareholder went Air Berlin went under.

Etihad’s decision to cease funding the failing airline sealed its fate. Before Etihad closed its checkbook, they’d pumped €1.8 billion in Air Berlin. Most of Air Berlin’s aircraft were leased. The airline’s most important assets were its slots scattered around Germany’s airports. At its Berlin-Tegel hub, Air Berlin had over 45% of the slots.

LOT Polish Airlines can appeal to the European Court of Justice. The airline says it is reviewing Wednesday’s decision.