Lufthansa, Thomas Cook's Condor in Tie-Up Talks
April 22 2016 - 7:30AM
Dow Jones News
Deutsche Lufthansa AG is in talks with Thomas Cook Group PLC's
Condor Airlines about a tie-up, people familiar with the talks
said, as the German flag carrier seeks to expand is Eurowings
budget unit.
The talks are still at an early stage with no assurance a deal
will be done, the people said. The negotiations range from
cooperation to a potential takeover of Condor by Lufthansa.
Lufthansa once owned Condor before eventually selling its
stake.
"I think Europe urgently needs another wave of consolidation,"
Lufthansa Chief Executive Carsten Spohr said last month. Budget
unit Eurowings was set up in a way it could "serve as our tool for
consolidation," he said.
Lufthansa also has been considering whether to exercise a
purchase option for the Brussels Airlines and potentially folding
the operation into Eurowings. The German carrier already owns 45%
of Brussels Airlines.
Europe's airline sector remains heavily fragmented when compared
with the U.S., where waves of consolidation have reduced the number
of carriers, helping underpin profits.
Airlines in Europe have seen ticket prices fall amid stiff
competition between rapidly expanding carriers such as budget
airlines Ryanair Holdings PLC and Britain's easyJet PLC, and
network airlines such as Lufthansa and Air France-KLM SA, who have
set up discount units to battle their cheaper rivals.
Thomas Cook in February reported that Condor's underlying
earnings before interest and taxes fell by £ 8 million ($11.5
million) in the first-quarter ended Dec. 31.
"While we continue to deliver growth in our long-haul markets,
overcapacity and weak demand in the short and medium-haul sector
has resulted in a lower year-on-year performance," Chief Financial
Officer Michael Healy said at the time.
Write to Archibald Preuschat at archibald.preuschat@wsj.com and
Robert Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
April 22, 2016 07:15 ET (11:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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