Air Berlin to buy Thomas Cook’s Condor

24 September, 2007:

The second biggest German airline, Air Berlin, has reportedly paid close to 500 million euros ($700 million) in cash and shares to buy Thomas Cook's charter airline Condor. The airline’s chief executive Joachim Hunold has been quoted as saying that it would also take on Euro 350 million in debt.

The transaction is seen as making Air Berlin the fifth biggest European airline. Analysts say that integrating Condor into the Air Berlin group would secure the future for both companies.

As per reports, Air Berlin is to acquire 75.1 percent of Condor in February 2009, plus a 24.9 percent stake currently held by the German airline Lufthansa in February 2010. The transactions require regulatory approval. The second stake would pass to Air Berlin via the exercise of a pair of purchase options.

Condor had planned to add long-haul flights in the northern hemisphere's winter season to meet rising demand after recording 20-percent increases in 2007 in bookings for flights to destinations such as Mombasa in Kenya and Anchorage in the northwestern US state of Alaska.

Thomas Cook would hold a 29.9-percent stake in Air Berlin as part of the deal, which involves a combination of share swaps and 120 million euros in cash. Thomas Cook chief executive Manny Fontenla-Novoa said that the deal would get Thomas Cook would get access to the capacity in Germany and that capacity would be flexible capacity, which the travel group could use as needed.

Meanwhile, Air Berlin expects to make at least 70 million euros in annual savings from 2010 through the tie-up, and the carrier will also be able to expand its long-haul offers and increase service to key airports in Frankfurt and Munich. The German carrier also plans to become the biggest European fleet operator of Boeing's 787 Dreamliner, with 25 firm orders and options for 25 more.