Etihad Airways is taking a stake of almost 30 percent in Germany's Air Berlin, becoming the first Gulf carrier to challenge European legacy airlines by putting cash on the table to gain scale. Abu Dhabi-based Etihad will spend about 73 million euros ($95 million) to buy new shares of Air Berlin, raising its stake to 29.21 percent from just below 3 percent, and will lend the German carrier $255 million, the two companies said on Monday.
Shares of Air Berlin jumped as much as 12 percent and were up 8.2 percent at 2.50 euros by 1427 GMT. Middle East carriers such as Etihad, Qatar Airways and Dubai-based Emirates have been aggressively expanding route networks, provoking fears that Gulf-based superjumbos would draw traffic from European carriers' hubs.
Qatar Airways recently acquired a 35 percent stake in all-freight carrier Cargolux, but the Air Berlin move is the first time a Gulf carrier has bought an equity stake in a European passenger airline. The deal includes a codeshare agreement giving Etihad access to Air Berlin's dense European short-haul route network, and to the German capital ahead of rival Emirates, which has lobbied for years to be allowed to fly to Berlin.
Air Berlin, which sees synergies of 35-40 million euros from the deal next year, will move its Middle East offices from Dubai to Abu Dhabi and will offer four flights a week from Berlin to the Gulf state from January 15, the companies said. So far, Etihad offers Frankfurt, Munich and Duesseldorf as German destinations. Emirates declined to comment on the deal.
"It's very tough to get into corporate accounts in Germany," Etihad Chief Executive James Hogan told Reuters. Airlines vie for business with corporate travellers, who are often willing to pay higher prices for last-minute bookings and are less flexible on flight dates and times, making them more profitable for airlines than tourists.
Comments
Comments are closed for this article.