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Air Berlin takes Condor
By Volker K. Thomalla
The consolidation of the airline industry in Germany is advancing with giant strides: on 20 September the Thomas Cook Group and Air Berlin announced that Condor was to become part of Air Berlin. Air Berlin is going all out, having taken over first dba, then the Swiss airline Belair, and then LTU all in the last twelve months. According to the announcement, a merger with Condor is appealing on account of the latter's attractive long-haul route network to tourist destinations. Together the new group will handle about 34 million passengers per year. Air Berlin does not need Condor's European routes, as it already covers these several times over itself. Nor does it need Condor's A320's. It has enough open orders with Airbus and Boeing to grow through its own efforts, albeit not at quite the same tempo.
75.1 percent of Condor's shares belong to Thomas Cook, a subsidiary of Arcandor (the former Karstadt-Quelle Group), while the remaining 24.9 percent are still in the hands of Lufthansa. The merger is to be financed by an exchange of shares under which Arcandor will acquire a stake in Air Berlin.
However, Lufthansa still has a right of pre-emption for Condor, which could pose an obstacle to the planned merger, as it is doubtful that Lufthansa will stand by quietly and watch as Air Berlin, already the second biggest airline in Germany, grows still further by joining forces with Condor. On the other hand, if Lufthansa agrees to the takeover, it will doubtless quickly dispose of its Condor shares. It will demand a high sum for them to ensure its competitor does not get a smooth ride. It is inconceivable that Air Berlin and Lufthansa would operate Condor jointly.
Another obstacle, which the CEOs of Air Berlin (Joachim Hunold) and Arcandor (Thomas Middelhoff) still have to overcome is the Federal Cartel Office. Despite viewing the takeover of LTU with suspicion, the Bonn-based competition watchdog had approved it, ironically arguing that the LTU-Air Berlin merger would not endanger competition as there was a strong competitor in the market in the form of Condor. It is no means certain that the merger will be approved in the form currently planned, although it would make sense, as these days the competition in air travel is no longer acted out at national, but at international level. According to the Frankfurter Allgemeine Zeitung, a spokesperson for the Federal Cartel Office said, “We have reservations.”
From FLUG REVUE 11/2007
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