Lufthansa gets European Union’s clearance to buy Brussels Airlines

Deutsche Lufthansa AG, the flag-carrier airline of Germany, has obtained permission from the European Union (EU) to buy a big stake in Brussels Airlines, the largest airline based in Belgium.

In a press release, Lufthansa said that it planned to spend up to euros 65 million ($90 million) on a 45% stake in SN Airholding, the holding company that owns Brussels Airlines.

The deal also would give Lufthansa the option to take over all of Brussels Airlines in 2011 for a price not exceeding euros 250 million.

However, Lufthansa would have to relinquish slots at airports in Belgian, Switzerland and Germany in order to steer clear of concerns over antitrust.
The antitrust solutions also include codeshare agreements and participation in frequent-flyer programmes by Lufthansa.

In a statement, the European Commission, the executive branch of the European Union, said that Lufthansa had agreed to sell airport slots to other airlines for flights between Brussels Airport and Frankfurt, Munich, Hamburg and Zurich in order “to soothe the European Union’s concerns that Lufthansa would become the only airline serving these routes.”

According to Neelie Kroes, Competition Commissioner of the European Union, the offer by Lufthansa to buy a large stake in Brussels Airlines would “facilitate market entry on the affected routes and thereby create alternative choices for airline passengers.”

Aviation experts say that Lufthansa’s acquisition of Brussels Airlines would give a fillip to the German flag-carrier’s network and also give it more passengers in the premium-class.

The European Commission had cleared Lufthansa’s takeover of British Midland Airways (bmi), the low-fare airline based in the United Kingdom, in May 2009.

Lufthansa is now planning to buy the Austrian government’s 41.56% stake in the loss-making Austrian Airlines, the flag-carrier airline of Austria, for 377.4 million euros.

Lufthansa, based in Cologne, Germany, and the second biggest airline in Europe after the Air France-KLM Group, said in a statement that its deal with Brussels Airlines would “enable both carriers to realise synergies, to intensify their cooperation further strengthen their competitive position.”

Major airlines based in Europe are competing to buy smaller competitors with a view to expanding networks and reducing costs amidst the global economic recession and rising costs of aviation turbine fuel.