The Strategist

Ryanair joins the battle to purchase Air Berlin

08/24/2017 - 12:31

Irish low-cost air carrier Ryanair has grandiose plans for the future. The airline is interested in taking part in a tender to purchase German Air Berlin recently declared bankrupt.

According to the chief executive officer of Ryanair Michael O'Leary, the company has not yet made a final decision on this issue. First, the carrier wants to access the financial statements of Air Berlin. Ryanair is interested in, in particular, information on leasing, labor agreements of the German airline, as well as on the terms of contracts with airports. This is necessary in order to determine extent of the necessary restructuring.

Earlier, the leadership of Ryanair accused Air Berlin and the German authorities of collusion. The Irish budget air carrier sent a complaint to the European antimonopoly authority against the actions of the German government. The Irish airline is confident that there is a conspiracy between bankrupt Air Berlin and the authorities of Germany. The German Ministry of Economics denied these accusations.

The German government has decided to provide Air Berlin with a loan under the state guarantee for 150 million euros. Thus, the carrier can safely continue flights within three months. Ryanair believes that this was done with a sole purpose to save Air Berlin from the debts before the transfer to Lufthansa Air Concern.

In mid-August, Air Berlin launched a bankruptcy procedure. The German government, Lufthansa and other airline partners decided that this solution is ideal for business restructuring.

In addition to buying a stake in Air Berlin, Ryanair's management is also interested in Italian air carrier Alitalia, which is also bankrupt. The management of the largest Italian airline decided to start bankruptcy in early May, after Alitalia employees refused to approve the restructuring plan.

Ryanair’s Chief Executive Officer Michael O'Leary also made a forecast for development of the aviation industry in the near future. In his opinion, there will be four or five aviation groups in five years in Europe. Among them are Ryanair, Lufthansa, Air France-KLM, British Airways and, probably, easyJet.

Earlier Ryanair sent a complaint to German and European antimonopoly agencies. The paper concerned a loan worth 150 million euros borrowed now-bankrupt Air Berlin under state guarantees.

"This artificially induced bankruptcy obviously serves only one purpose - so that Lufthansa can take over the debt-free airline, which obviously contradicts the German and European principles of free competition," Ryanair said. The Irish company called the deal involving Air Berlin, Lufthansa and German authorities "an obvious collusion."

The authorities of the Federal Republic of Germany consider these allegations to be groundless.

Such statements are ridiculous, since no one expects that Air Berlin will get only one airline, said State Secretary of the German Ministry of Economics Matthias Machnig. All interested players naturally have equal chances in the struggle for Air Berlin’s legacy, he stressed.