German low cost airlines plan merger

Thomas Cook plane

[August 29th 2008]

Three low cost airlines in Germany – Germanwings, Condor and TUIfly – are planning a merger in order to cut costs.

Germanwings is the low cost arm of German national carrier Lufthansa, while Condor is owned by the German controlled travel group Thomas Cook, and TUIfly by another German travel company TUI Travel.

If the airlines were to merge it would create a substantial low cost and charter carrier similar to Air Berlin, which is currently the third largest low cost airline in Europe after easyJet and Ryanair.

Thomas Cook has confirmed it is in “early discussions” with Lufthansa and TUI Travel about the potential merger. “However, no commercial terms have been agreed. There is no certainty that any transaction will result and a further announcement will be made if and when appropriate,” the company said in a statement.

It is by no means certain that a merger would get approval from the German and European authorities. Lufthansa is the largest airline in Germany, and TUI and Thomas Cook are the biggest travel groups in the country so the merger would raise questions about competition.

Thomas Cook had been planning a merger with Air Berlin, but announced on July 11th that it was withdrawing from the deal. “Thomas Cook continues to view Condor as a strong business with significant potential. Whilst discussions continue with Air Berlin about the feasibility of an alternative transaction, Thomas Cook is also pursuing a range of other available options for Condor,” it said at the time.

Air Berlin’s earnings fell by a quarter in the second quarter of this year as it was hit by high oil prices like all airlines. The airline has already announced it is suspending flights to New York and China and plans to make cutbacks to its European services over the winter.

Lufthansa announced yesterday that it is in talks to buy a 45% stake in SN Airholding, parent company of Brussels Airlines, for 65 million euros. Brussels Airlines operates flights from Brussels to destinations around Europe and also specialises in flights to Africa. After two years the deal would also give Lufthansa the option to acquire the remaining 55% of SN Airholding.

Written by: Nick Purdom


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German Low Cost Airlines Plan Merger