Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Lufthansa M&A Chief Bemoans Limit on Emerging-Market Investments

Don't Miss Out —
Follow us on:

April 3 (Bloomberg) -- Deutsche Lufthansa AG said curbs on airline mergers are limiting its ability to target emerging markets and channeling takeover activity into service operations where investment rules are less stringent.

Europe’s second-largest airline is particularly concerned given growth rates at Chinese and Gulf competitors, Isabel Todenhoefer, who heads Lufthansa’s mergers and acquisitions department, said today during a debate at an M&A conference.

“The regulatory environment when it comes to acquiring airlines outside of Europe is just very, very difficult,” she said at the conference in Frankfurt. “We hope that will change. We do think it’s important that we are a part of it.”

Lufthansa gets 65 percent of passenger and cargo sales in Europe and risks falling behind as travel grows faster in Asia, Latin America and the Middle East. The company hasn’t invested in a major foreign carrier since 2009, when it bought Austrian Airlines, London-based BMI and 45 percent of Brussels Airlines.

“We depend on growth and there is a lot in emerging markets,” Todenhoefer said, adding that a recent slowdown hasn’t altered Lufthansa’s world view. “We need to be present there. That’s where population growth is coming from.”

Major airlines have generally eschewed the minority stakes in overseas carriers available under current limits, with an investment spree at Etihad Airways PJSC the exception to the rule. Like European rivals, Lufthansa has pursued cost and revenue sharing pacts, teaming with United Continental Holdings Inc. on trans-Atlantic flights, All Nippon Airways Co. in the Germany-Japan market and seeking a deal with Air China Ltd.

Lufthansa has found a partial outlet for its takeover ambitions in service businesses such as food and engineering, where the company is one of the industry’s biggest players after many other carriers outsourced non-flying activities.

“We have a lot of services companies,” Todenhoefer said. “Our catering business for example is very much involved in acquisitions.” Still, service deals in emerging markets are generally more successful when local partners are involved, mitigating against 100 percent purchases, she said.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net Christopher Jasper

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.