Lufthansa is set to increase its hold on Europe”s airways if a ”65 million bid for a stake in Brussels Airlines is successful.
An offer for an initial 45% stake is on the table, with a deal to take control of the Belgian carrier within two years. If agreed, the deal could see Brussels Airlines and, potentially, its major code share partner, Jet Airways of India, brought into the Star Alliance.
Under the proposal, Brussels Airlines would be run as an independent entity in exactly the same way as Lufthansa”s other subsidiary, Swiss International Air Lines.
The German carrier is still in negotiations with Brussels Airlines parent company SN Airholding, in which it will buy the remaining 55% by 2010 at a price dependent on profitability.
If sealed, the deal will mean Lufthansa gets a valuable foothold at Brussels airport ” which Jet Airways uses as its European hub - and a network of long-haul routes to Africa operated by Brussels Airlines and fed by services from around Europe. These will allow Lufthansa to further increase its presence in the African continent, mounting a more credible challenge to Air France/KLM.
The deal has an added twist in that two years ago, Brussels Airlines was merged with Virgin Express, the former budget carrier started by Sir Richard Branson. The Virgin Group maintains a 29.9% stake in the company.
Virgin Atlantic has expressed strong interest in a merger with BMI, the Star Alliance airline in which Lufthansa has an option to buy next year.
Lufthansa is planning a buying spree while oil prices are sky-high and the value of airlines is consequently low. It has also expressed interest in Austrian Airlines, which the Austrian government is keen to sell.
At the same time, it is trying to divest itself of its budget carrier Germanwings in a three-way merger with TUIfly - tour operator Tui AG”s budget German airline - and Condor, Thomas Cook”s German charter carrier.
For more information visit www.lufthansa.com, www.brusselsairlines.com.
Gary Noakes
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A Brussels Airlines Boeing 737