AirBerlin, Germany's second largest airline after Lufthansa, continues to struggle to return to profit. The German business daily Handelsblatt has reported that Lufthansa is ready to buy back air routes from its rival and allocate them to its low-cost subsidiary Eurowings. According to Handelsblatt, Lufthansa has contacted Airberlin's shareholder, the Emirates company Etihad, which owns 30 % of the capital.
Loss-making for the last 10 years, AirBerlin's strategic positioning is too vague to allow the airline to survive as such. In fact, AirBerlin's approach is both low-cost and traditional: an airline with point-to-point flights in Europe, but also offering connections for the Etihad network; an airline geared towards business customers with a dense European network; and finally a leisure carrier with long-haul flights to holiday destinations. A muddled operational strategy, then, which cannot be changed in the long term. Last April, the airline's CEO, Stephan Pichler, announced that he wanted to reposition AirBerlin on the premium segment, essentially business. The airline has already decided to abandon its long-haul holiday routes from Munich and to increase its presence at its two hubs in Berlin Tegel and Düsseldorf.
According to Handelsblatt, Lufthansa's proposal would bring benefits to both airlines. The German national carrier proposes to acquire the routes and aircraft that do not serve AirBerlin's hubs in Düsseldorf and Berlin Tegel. Lufthansa could thus acquire around thirty air routes and some forty aircraft to support the expansion of Eurowings, which, according to Lufthansa, needs to step up a gear if it is to be truly profitable. For AirBerlin, the sale would support the rationalisation of its network by concentrating its offer on its two main hubs of Berlin and Düsseldorf. And, as a result, have a clear strategic positioning in terms of customers.
However, the stripping away of AirBerlin's assets could have a downside: it could reduce the carrier's appeal within the Oneworld alliance. This could result in the German carrier eventually leaving the alliance. Which would probably not displease Etihad...
According to Handelsblatt, negotiations between Lufthansa, AirBerlin and Etihad could be concluded by October. Negotiations that the three airlines, all in chorus, have for the time being described as rumours...
