German airline Lufthansa buys share in Brussels Airlines
[September 15th 2008]
German national airline Lufthansa is acquiring a stake in a much smaller airline, Brussels Airlines.
To begin with Lufthansa is buying a 45% share in Brussels Airlines parent company SN Airholding for 65 million euros. Subject to regulatory approval Lufthansa will have the option of securing the remaining 55% from 2011. The total cost would depend on performance related factors but could amount to up to 250 million euros.
Brussels Airlines currently flies to 62 destinations, and Lufthansa would add a further 12 destinations to its network after the merger. Lufthansa says it sees integration with Brussels Airlines along the same lines as its cooperation with Swiss.
A joint future with Lufthansa provides us with the best chance of operating successfully against the competition. Lufthansas multi-hub and multi-brand strategies constitute the best prerequisites for the stability and future growth of Brussels Airlines, says SN Airholding chairman, Eitienne Davignon.
"Together we can offer more destinations, optimised connections, mutual use of each others frequent flyer programmes and extended lounge access, which will enhance the attractiveness of the portfolios of both airlines. Belgium and Germany as well as the Star Alliance member-airlines will profit from the merger," comments Lufthansa chairman, Wolfgang Mayrhuber.
The intention is that Brussels Airlines will retain its headquarters and management in Brussels even after Lufthansa acquires a 100% stake. Brussels Airlines will continue operating and developing under its familiar brand with its own aircraft and crews.
"In their joint future, Brussels Airlines and Lufthansa can profit from substantial synergies in respect of earnings and costs, which are likely to rise gradually to a mid-double-digit million euro figure annually within three years of regulatory approval," Lufthansa said in a press statement.
More airlines are likely to cooperate or merge in the face of rising costs and falling demand.
Written by: Nick Purdom
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