Air Berlin buys rival Dba

[Pieter C. 5]

August 17, 2006

Air Berlin, Europe's third-biggest budget carrier, has bought German rival DBA to expand its route network as it battles fierce competition in the region's crowded air travel market.

 

Air Berlin said it paid a mid-double-digit million-euro sum for the former German unit of British Airways -- three years after the UK carrier offloaded the business for one euro.

 

"The route networks of Air Berlin and DBA complement each other superbly because there are no overlaps," said Air Berlin Chief Executive Joachim Hunold in a statement.

 

DBA serves primarily German domestic routes, while Air Berlin is mostly focused on routes from German airports to destinations around the Mediterranean, with a large dependence on its hub at Palma de Mallorca.

 

Together the airlines will have annual traffic of around 20 million passengers, though this is still far below larger rivals Ryanair, which carried 37.6 million passengers in the 12 months to July, and easyJet, with 32.4 million.

 

DBA will continue to operate as an independent company, but it will be marketed as Air Berlin. A joint summer schedule will come in from April 1 next year, Air Berlin said.

 

The takeover will give Air Berlin key take-off and landing slots at Germany's Munich and Dusseldorf airports, as well as providing corporate clients, Air Berlin added.

 

"We can integrate DBA's domestic routes in our European network without any problem, thereby achieving a clear increase in the number of business travellers," Hunold said.

 

"In summer, when there are fewer business travellers, we can make excellent use of the DBA aircraft on our tourist routes."

 

Air Berlin also said on Thursday it had a net profit of EUR30.1 million euros (USD$38.68 million) in the second quarter, compared with a year-earlier loss of EUR4.2 million.

 

Air Berlin added that it would pay for DBA with its liquid funds and that no capital increase was needed.

 

(Reuters)

 

[I. Wong 0]

Air Berlin is expanding very fast. They even fly from Belfast City Airport to London Stansted at £19.00 only. Why British government allow them to enter to their domestic route to compete with BMI, Flybe, Easyjet and other local airlines?

[Keith T 2]

Why British government allow them to enter to their domestic route to compete with BMI, Flybe, Easyjet and other local airlines?

 

Because they have to, as per the EU's air liberalisation laws. DBA was once owned by British Airways ('Deutsche BA') until it was sold to Intro Verwaltungsgesellschaft for 1 Euro in 2003 and rebranded.

Edited August 18, 2006 by Keith T

[Pieter C. 5]

Wondered what would happen to LTU, which cooperated already with Dba; here's the answer:

 

"German consolidation continues as Air Berlin acquires dba

Friday August 18, 2006

Air Berlin, Germany's second-biggest carrier after Lufthansa, said yesterday that it will take over 100% of dba, the country's No. 3 airline.

 

The contract was signed late Wednesday in Munich by dba owner Hans Rudolf Woehrl and Air Berlin CEO Joachim Hunold after several weeks of secret negotiations and is subject to approval from competition authorities. Dba acquired LTU German Airlines just two months ago (ATWOnline, June 12) and that carrier is expected to follow its new parent under the AB umbrella.

 

Hunold said the price was "a middle-double-digit euro million deal" and that no capital increase is necessary. He added that the airlines' respective networks fit perfectly with no overlaps. Dba will operate independently from Air Berlin but aircraft will be repainted in AB's white-and-maroon livery and read "powered by dba." Martin Gauss and Peter Wojahn will remain as MDs at dba and an AB spokesperson told ATWOnline that "there is no cutting of staff planned."

 

Schedules should be integrated fully with the summer timetable starting April 1, with dba's domestic routes folding into AB's European network. Dba's slots at Munich and Dusseldorf, where AB could not grow any further, were a critical component of the deal. Additional synergies will be implemented through joint orders, yield management, logistics and the entree for dba to 13,000 German travel agencies.

 

Air Berlin and dba expect to transport 20 million passengers this year and AB has no plans to cancel dba's order for 25 737NGs scheduled to begin delivering in 2008, according to the spokesperson, who said that "dba got a very good price for that deal from Boeing and we need those aircraft for further growth."

 

AB earned a €30 million ($38.4 million) profit in the second quarter, Hunold said, following a first quarter in which it lost €31 million (ATWOnline, June 2). It operates 58 aircraft and expects a profitable year. Dba operates 29 aircraft and transported 4.3 million passengers in its last fiscal year with turnover of €404 million."

 

Keith, I'm, obviously, a happy man, as a Gold TopBonus member, as more possibilities for me

 

Wong, like Keith said, the UK cannot do anything because of EU-laws; likewise, Easyjet is operating domestic French routes and Ryanair routes from Germany to Latvia, for instance; even, KLM could operate between MAD-BCN or HEL-RIX if it wanted

More competition is excellent news for the customers

[Keith T 2]

Keith, I'm, obviously, a happy man, as a Gold TopBonus member, as more possibilities for me

 

Awesome!

I'm sure fierce competition between LH and AB would be good for me too - lower LH fares for me to earn my *A miles on.

 

Consolidation would be the key to survival in the EU market.

Edited August 18, 2006 by Keith T

[Pieter C. 5]

Consolidation would be the key to survival in the EU market.

 

Exactly !!! The AF-KL was laughed about at first, but now more consolidations evolve (like LH-LX)...

 

Wonder what BA is gonna do in Europe: buy IB ?

[Keith T 2]

Wonder what BA is gonna do in Europe: buy IB ?

 

That was speculated after BA disposed of its shares in QF. Nothing has come of it though.