Air Berlin has bought DBA from its owner, German investment group Intro, for a "net purchase price" of €20-30 million ($25-40 million) financed from its cash reserves. The deal is just the latest of several ownership changes at DBA, which was sold to Intro by British Airways in 2003 for just €1.
"Acquiring our dream partner was an opportunity not to be missed," says Joachim Hunold, Air Berlin chief executive. Taking over DBA gives Air Berlin a much stronger domestic presence, allowing it to become a more serious competitor to Lufthansa with a market share in seat terms of 17.7%. The German flag carrier has a dominant home market share of 64% of seats, according to data from Innovata.
The move cements Air Berlin's position behind easyJet and Ryanair as Europe's third largest low-fare player and helps the carrier tap into a larger business traveller base. With no network overlaps, the two carriers complement each other "superbly" and Air Berlin "will be gaining 62 corporate contracts at a stroke," says Hunold. "The DBA slots, especially those at Munich and Düsseldorf airports, cannot be rated too highly either."
"The fit is clear, it makes sense to combine the two," says Carsten Gutknecht-Stoehr, senior vice-president credit aviation at Germany's DVB Bank. The flight schedules for this winter will be harmonised where possible and a joint summer operation will be in place from April 2007. The carrier will operate as an independent company under Air Berlin's umbrella but marketed as "Air Berlin, powered by DBA".
Air Berlin has been responsible for several co-operation initiatives in Europe, including a marketing deal with Austria's Niki and a cross-selling pact with DBA. Commenting on this deal, Andrew Lobbenberg, London-based analyst with ABN-AMRO, says: "Consolidation in the low-cost sector has to be a good thing for the industry, giving fewer stronger players."
The deal was revealed as Air Berlin said it reduced its losses in the first six months of 2006 to just €1 million. In 2005 it made a net loss of €143.5 million, while DBA said it was profitable. Hunold said Air Berlin, which launched an initial public offering in May, will make a "handsome" profit this year. Together the carriers had revenues of €1.6 billion in 2005 while carrying 17.8 million passengers on a fleet of 87 Airbus A320s, Boeing 737s and Fokker 100s.
The deal comes just a few months after Intro bought a majority stake in German charter carrier LTU and promised to bring it and DBA closer together. This ambition is now redundant. Air Berlin/DBA will work with LTU on selling each other's flights but there will be no further connections or tie-ups between the two, says Hunold. ■
Source: Airline Business