GERMANY: Air Berlin, Europe's third-biggest budget carrier, buys German airline DBA to expand its route network
- 00:00:59
- ITN Source
GERMANY: Air Berlin, Europe's third-biggest budget carrier, buys German airline DBA to expand its route network
Air Berlin, Europe's third-biggest budget carrier, on Thursday (August 17) bought German airline DBA to expand its route network as it battles fierce competition in the region's crowded air travel market, boosting its shares. "DBA is a fantastic chance for Air Berlin because we don´t have a domestic network, DBA has a domestic network, so it fits completely into our European network," said Air Berlin Chief Executive Joachim Hunold. DBA serves primarily German domestic routes, while Air Berlin is mostly focused on routes from German airports to destinations around the Mediterranean, with a large dependence on its hub at Palma de Mallorca. Together the airlines will have annual traffic of around 20 million passengers, though this is still far below larger rivals Ryanair, which carried 37.6 million passengers in the 12 months through July, and easyJet, with 32.4 million. DBA will continue to operate as an independent company, but it will be marketed as Air Berlin. A joint summer schedule will come in from April 1 next year, Air Berlin said. The takeover will give Air Berlin key take-off and landing slots at Germany's Munich and Duesseldorf airports, as well as providing corporate clients, Air Berlin added. Air Berlin also reiterated that it expected to post a clear profit for the full year after it swung to a profit in the second quarter. It said the purchase of DBA would not weigh on earnings. Shares in Air Berlin, which made a disappointing stock market debut in May, jumped as much as 9.6 percent. Air Berlin said it paid a mid-double-digit million-euro sum for the former German unit of British Airways three years after the UK carrier offloaded the business for a euro. Air Berlin also said on Thursday it had a net profit of 30.1 million euros ($38.68 million) in the second quarter, compared with a year-earlier loss of 4.2 million euros. Second-quarter sales rose to 401 million euros from 330 million a year ago, while earnings before interest and taxes (EBIT) grew to 44.8 million euros from 8.8 million. Stockbroker Fidel Helmer from Aufhueuser and Company, said of the potential of this buyout: "The Stock Exchange sees this in a very positive light. Air Berlin were recently listed on the Stock Exchange themselves, and with DBA they have now gained LTU, and that provides them with enormous synergy effects." Air Berlin added that it would pay for DBA with its liquid funds and that no capital increase was needed.
ITN Source | August 18, 2006
