Lufthansa buys the remaining 55% of Brussels Airlines

[Conti764]

I hope it never goes through, this acquisition. SN has no added value to the LH group, but the Germans absolutely wanted no OW hub in their backyard, hence taking over SN and thus prevent BRU from turning into a OW hub, at only a few hundred km's of FRA...

They dont really have a choice do they? Unless they can find a partner who wants to buy them out of their financial commitments to the LH group.

IAG

No, I'm realistic enough to realise SN can't escape LH but I am not as optimistic as some here who have wild dreams about SN's future in EW and the role BRU might play in it...

[sean1982]

I hope it never goes through, this acquisition. SN has no added value to the LH group, but the Germans absolutely wanted no OW hub in their backyard, hence taking over SN and thus prevent BRU from turning into a OW hub, at only a few hundred km's of FRA...

They dont really have a choice do they? Unless they can find a partner who wants to buy them out of their financial commitments to the LH group.

IAG

No, I'm realistic enough to realise SN can't escape LH but I am not as optimistic as some here who have wild dreams about SN's future in EW and the role BRU might play in it...

IAG could be a good partner indeed, im sure Gustin is smart enough to pitch a few ideas there if not only to put some pressure at least on LH.

I agree with you on the "Norwegian clone plan" that's being pitched here. I dont see it happening as this would require an investment of hundreds of millions of euro's and I dont think LH sees SN as a pot of gold. They had huge plans with eurowings on long haul when it was launched and the realisation of those plans even is MUCH less then what was initially pitched by them.

[RTM]

Pfff...

My guess is that negociations were ongoing, and probably going well between LH and SN to go for the complete take-over. It's not like LH can just say, ok, now we want the rest, here is the money, give us all you've got... That may have been possible when SN was losing €80m, but no more. SN is in power to negociate the best deal possible. Both to their stakeholders, as to their employees. They will want guarantees on a lot of issues, and right so. I mean, it is not because LH has the sole rights to buy at the moment, they have to sell. Not at any price anyway.

I don't think so. LH holds the option to buy, SN can't refuse nor negotiate.
As far as I remember there is a formula in the agreement to determine the price of the remaining 55%.

There is always room to negociate. The price maybe defined, but the data to use in the formula is always subject to interpretation, so there is discussion nr 1, then, if LH buys the company on terms that are not favourable for the personell, and they rebell, they end up with an expensive nothing... So it is never clear cut, and negociations are always needed.

[citybirdva]

Condor/TCAB also coming into the picture...

"Lufthansa (LHAG.DE) is seeking a partnership with, or a complete takeover, of holiday airline Condor to further expand its low-cost Eurowings business, three people familiar with the matter told Reuters.

Talks with Condor parent Thomas Cook (TCG.L) have been going on since at least January, they said.

Lufthansa, Condor and Thomas Cook all declined to comment.

Shares in Thomas Cook gained on the news and were up 2.2 percent at 0901 GMT. Lufthansa shares were unchanged.

Lufthansa launched Eurowings last year in a fresh attempt to crack the low-cost market and compete with the likes of Ryanair (RYA.I) and easyJet (EZJ.L).

It has said it aims to use Eurowings to bundle various subsidiaries and brands, and sources recently told Reuters that it was also eyeing Scandinavian carrier SAS (SAS.ST) and Brussels Airlines.

Talks with Thomas Cook could result in a marketing cooperation that would allow Lufthansa to buy capacity on Condor's 46 aircraft, sources told Reuters.

One option is also that Lufthansa could acquire a minority stake in Condor, or take over the airline completely." (http://uk.reuters.com/article/uk-condor ... KKCN0XJ0PI)

[sn26567]

Talks with Thomas Cook could result in a marketing cooperation that would allow Lufthansa to buy capacity on Condor's 46 aircraft,

That's the opposite of what's happening in Belgium, where Thomas Cook buys capacity on SN's planes. But this type of cooperation existing between the Thomas Cook group and the Lufthansa group could put some oil in the negotiations.

[Flanker2]

Who said that the 55% shareholders can't back out?
The shareholders still have the option to back out and take their chances in court.
Explanation:
Options are contracted rights to purchase shares for a pre-agreed fixed or variable price within a pre-defined period of time, from the issuer of the call option.
HOWEVER, the issuers still have the option to refuse to sell the shares.
Then, it becomes a breach of contract. If there is no mention of penalties in the contract, it becomes a matter for the courts to decide how much damage is owed by the shareholders to LH.
If the call option has a lower value than SN's net worth x 55% and long term profit potential, chances are that said damages would be ruled as ZERO. Here, LH's lack of commitment for many years plays in favor of such a ruling.

Even if a court rules that damages are owed, it would take years to get a verdict.
By then, perhaps a new buyer could be ready to pay enough so that the shareholders are compensated for the damages on top of their shares... like by IAG.
In fact, the shareholders could transfer everything to a new Belgian company indeed.

To make this happen the 55% need to be united. Given the political stakes, I don't think that unity is difficult to achieve in this case.

It would be really badass if this happens.

Chances are slim though.


I doubt that Eurowings can expand in BRU.
How would you expand such an operation? Start flying to everywhere and nowhere?
BOS, LAX, MIA?

Low cost longhaul: Ask Norwegian and SQ/Scoot how well that is going. They can't make money even at 100% load factors. It just doesn't work. Thier fares aren't that low either, most fare search engines will find lower fares.
Who wants to fly business class with a LCC? Would you buy a Eurowings business class seat? When a choice is possible, they'll take a legacy airline. You can't sell a business class seat at half the price, because a Y seat takes up the equivalent of 3-6 Y seats while prices are 3-6 times higher. Other services also cost more in the same way. At a 25% discount, pax will go for a legacy carrier or ME3.

[Passenger]

Just a reminder: there is that meeting of Lufthansa's Supervisory Board tomorrow.

http://investor-relations.lufthansagrou ... board.html

(my 50 cent bet: a reconfirmation of the engagement, but a postponement of the marriage)

[koja78]

oh look.. we are 27/4

[SLM]

No news???

[Bralo20]

No news???

No, nothing new yet. The only thing I found was a CAPA newsmessage but it just summarizes what's been discussed for a while.

http://centreforaviation.com/analysis/l ... ity-277949

[Passenger]

The final decision is delayed.

[Bralo20]

In Dutch:

http://www.standaard.be/cnt/dmf20160427 ... gn=seeding

No take-over, new boardmeeting in September to discuss it again.

[BRU]

Belga: ALERT - Lufthansa zal Brussels Airlines niet voor september volledig overnemen en werkt aan "een concept voor migratie in de Eurowings groep", zegt Lufthansa.

No take over before September, working on a concept to migrate into Eurowings group.

[Inquirer]

According to De Tijd, Brussels Airlines and Lufthansa have mutually agreed to extend by 3 months the time frame to complete the take over and draw up integration plans.

http://www.tijd.be/ondernemen/luchtvaar ... 1461775316

Seems the deal is done indeed (as expected), but the quickest possible return to normality is currently taking up too many managerial resources at BRU. (again as expected).

[cathay belgium]

Hi,

If SN will be integrated within Eurowings, except maybe longhaul, what reason would belgians opt eurowings above ryanair or easyjet.
If the Germans would take off our belgian identity, I would prefer to fly FR,U2 above EW !
So the swiss and the austrians can have their identity but not the belgians ?
Still mad that we don't speak german i dare to say !
Whats the reason SN is still growing ? One thing for certain is their belgian own identity within belgium! Like Sabena before!
If it is a big , not known, eurowings brand .... I opt for the more familiar FR, prices,routings will still be similar...
If EW is going further... I hope the full takeover option by LH will never be lifted !

Sad future IMHO..

CXB

[sean1982]

No take over before September, working on a concept to migrate into Eurowings group.

And there goes the last Belgian airline. Quite stupid from LH to assume to think that they can extrapolate the succes of SN to a pan european carrier as I feel that a big part of the succes was it's belgian identity.

If 22/03 hadn't happened the situation would probably have been completly different. I even dare to accuse the LH group of cashing in on this event.

[Boeing767copilot]

Alle details on:


https://www.lufthansagroup.com/en/press ... /4014.html

[Inquirer]

The article in De Tijd now mentions the fact that the odd extension by just 3 months (rather than simply wait till next year like I had expected) is a clear sign the decision is taken in principle.

It reports the 2 things currently still to be worked out are:
Price setting for the remaining 55% share.
The detailed model in which B.air can maintain its own identity while also benefit to Eurowings.

My own feeling is they will remain b.air on business routes as well a intercontinental destinations (no change there), but become an operating carrier for the Eurowings brand on leisure routes on which they will then put their own flightcode: a bit like Easyjet's Swiss flights are officially done by another Swiss company too (hence their different flight code).

According to l'echo, this is the most likely outcome too as the Belgian identity is heavily pushed by chairman Davignon, with further growth for both brands envisaged.

http://www.lecho.be/entreprises/aviatio ... 4-3017.art

[DannyVDB]

I have no access to CAPA, maybe someone has.

http://centreforaviation.com/analysis/l ... ity-277949

The summary already reveals interesting view(s) ...

Cheers,
Danny

[Poiu]

So the Germans want to negotiate a lower price, says a lot about both the financial situation at SN and the intentions of Lufti.
I don't buy the stories about managers being to busy. The attacks happened a month ago, so most of the work was probably already done by then. Lufti now sees an opportunity to spend less and puts the plans on hold.
The three months deadline is probably the time SN can survive without being taken over by Lufti. The pressure on the Belgian negotiators will increase day by day. They will have to choose between money or a Belgian identity.
There was an interesting interview with Prof Van de Voorde, transport expert from the Antwerp University in the Standaard from saturday. He is not very optimistisch about the future of Belgian Aviation.