Lufthansa takes over Brussels Airlines

Deutsche Lufthansa, the flag carrier of Germany and the largest airline in Europe in terms of overall passengers carried, has signed a deal to take over Brussels Airlines, the national airline of Belgium and the country’s largest airline.

Lufthansa has confirmed that it will buy a 45% stake in Brussels Airlines for 65 million euros (US $91.43 million), with an option to buy the remaining 55% stake in 2011. The total price would depend on performance-related factors and initially on 2010 results, Deutsche Lufthansa said in a statement in Frankfurt.

According to reports in the Belgian media, Lufthansa, which is seen as one of the key players in the consolidation of Europe’s struggling airline industry, is interested in buying airlines such as the loss-making Alitalia, Austrian Airlines, and Scandinavia’s SAS.

Deutsche Lufthansa, which also owns Swiss International Airlines, would continue to operate independently after the deal, reports said.

Brussels Airlines flies to over 50 destinations in 20 European countries, as well as operates long-haul flights to East Africa, Central Africa and West Africa. It also operates charter services. Brussels Airlines is a member of the International Air Transport Association (IATA) and the Association of European Airlines (AEA).

Brussels Airlines, which started operating in March 2007, was formed by combining the budget carrier Virgin Express airline SN Brussels Airlines, the successor to former Belgian flag-carrier Sabena, which went bankrupt in 2001.

At present, Brussels Airlines is 70% owned by Belgian companies and 30% by Virgin Express, British entrepreneur Richard Branson’s low-fare carrier.

Wolfgang Mayrhuber, Chief Executive of Lufthansa, was quoted as saying: “The purchase is a further sign of Lufthansa’s transformation from a purely national carrier to a European airline system able to compete with Asian and North American giants.”

“Brussels Airlines,” Mayrhuber added, “would bring a prime location where the European Union and NATO are based, logistics experience and a wide network, notably including many flights to and from Africa. Even after the takeover, Brussels Airlines would operate as a largely independent carrier and retain its brand, as well as its headquarters and management in Brussels. It is likely to join the Star Alliance global network, of which Lufthansa is a member.”

Mayrhuber said the acquisition still needed approval from regulators, Lufthansa’s supervisory board and the board of directors and shareholders of SN Airholding.

On the Deutsche Lufthansa-Brussels Airlines deal, the Belgian media quoted a spokesman for Brussels Airlines as commenting: “It is about our future together.”

Brussels Airlines has been going through tough times and struggling to survive on its own, partly because of the high prices of fuel.

Lufthansa’s takeover of Brussels Airlines comes at a time when several airlines across the world are in trouble – notably Alitalia, the flag-carrier airline of Italy, which was declared bankrupt on August 29, 2008 – on account of exorbitant prices of aviation turbine fuel as well as global economic problems.