Budget airline Air Berlin acquires rival DBA

17th August 2006, Comments 0 comments

17 August 2006, BERLIN - Shares in budget airline Air Berlin Plc surged 6.9 per cent Thursday after Germany's second biggest carrier announced that it had acquired rival DBA as consolidation pressures grow in the country's intensely competitive aviation business. While the details of the purchase price were not revealed, Air Berlin said that it would pay a "mid double-digit million euro" amount for the Munich-based DBA as part of moves to expand the number of its routes and boost passenger numbers. "Acquir

17 August 2006

BERLIN - Shares in budget airline Air Berlin Plc surged 6.9 per cent Thursday after Germany's second biggest carrier announced that it had acquired rival DBA as consolidation pressures grow in the country's intensely competitive aviation business.

While the details of the purchase price were not revealed, Air Berlin said that it would pay a "mid double-digit million euro" amount for the Munich-based DBA as part of moves to expand the number of its routes and boost passenger numbers.

"Acquiring our dream partner was an opportunity not to be missed," Air Berlin chief executive Joachim Hunold said announcing the surprise purchase, which followed weeks of secret talks.

The announcement led to Air Berlin shares jumping to 10.58 euros (13.60 dollars) in early morning trading and consequently helped to push the group's stock back up to its back up towards its May issue price of 12 euros.

Air Berlin's announcement that it was buying its Munich rival is also a sign of the growing pressures for a shakeout in Germany's air travel sector with increasing competition in the aviation industry following a dramatic jump in the number of budget airlines setting up in the nation.

Germans are also the world's travel champions, resulting in major discount air carriers such as Ryanair Holdings Plc and Easyjet Plc boosting their operations in Europe's biggest economy and as a result challenging major scheduled airlines.

For Air Berlin, which currently operates 58 aircraft flying in particular to holiday destinations, the DBA purchase will mean the two combined airlines will carry about 20 million passengers this year.

Moreover, with DBA having a strong focus on Germany's domestic business travel market, Berlin-based Air Berlin will be able to add lucrative corporate customers to its passenger lists.

"The route networks of Air Berlin and DBA complement each other superbly because there are no overlaps," Hunold said.

"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 using our airline."

Air Berlin said it is also expecting the deal to lead to a "significant profit" this year with the expansion of the group's business leading to it intensifying its rivalry with Lufthansa AG, Germany's number one carrier.

The DBA takeover coincides with Air Berlin saying that it had swung into a profit during the second quarter this year.

Air Berlin said it had turned last year's second-quarter loss of 4.2 million euros into a net gain of 30.1 million euros in the second quarter this year, boosted by a 22-per-cent jump in revenue to 401 million euros.

Formerly known as Deutsche BA, DBA was acquired by a management team from British Airways Plc about three years ago. Air Berlin said it would be managed as a separate operation.

However, the Air Berlin takeover of DBA still has to be approved by Germany's monopoly authorities.

DPA

Subject: German news

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