Lufthansa to Add Brussels Airline to Eurowings Low Cost Armby
Decision postponed by one quarter due to Zaventem bombing
Merger could bring Eurowings' fleet to close to 150 aircraft
Deutsche Lufthansa AG plans to buy the remaining shares of Brussels Airlines and fold the Belgian carrier into its Eurowings low-cost unit, adding capacity to better compete with Ryanair Holdings Plc and EasyJet Plc.
Lufthansa will conduct talks with the management of Brussels Airlines before exercising an option to buy the 55 percent it doesn’t already own in parent company SN Airholding, Germany’s largest airline said in a statement late Wednesday. Lufthansa had a deadline to exercise the annual option by June, but agreed with SN on an extension until the end of August to give the airline time to recover from the March 22 attacks at Brussels Zaventem airport.
“We have agreed with Brussels Airlines to give ourselves a further three months to conclude our negotiations on the acquisition terms and devise the migration concept required,” Chief Executive Officer Carsten Spohr said in the statement. “Our colleagues at Brussels Airlines are currently devoting all their energies and resources to restoring reliable flight operations.”
Spohr is under pressure to get his low-cost expansion on track. Resistance by unions to cut costs have slowed progress, and the spats continue. Eurowings has also suffered operational problems, including delays caused by technical glitches on new long-haul routes and limited sales within Europe.
Brussels operates a fleet of 46 aircraft, mostly Airbus A320 models, the same make Eurowings will operate once its remaining smaller Bombardier CRJ aircraft have been replaced. The Lufthansa unit had 86 aircraft at the end of last year and plans to increase its fleet to 98 by the end of 2016.
Lufthansa bought 45 percent of Brussels Airlines for 65 million euros ($74 million) in 2008 and has had an annual option to buy the rest for a price tied to the carrier’s performance. Brussels reported a profit in 2015, the first since Lufthansa acquired its stake. The attacks last month in Brussels are set to reduce net income by about 70 million euros this year, the airline said.