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Mon 25 Sep 2017 08:31 AM

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Lufthansa and EasyJet nose ahead in race for Air Berlin

German national carrier reportedly beat out IAG and three bids of between $600 million and $715 million apiece from private investors

Lufthansa and EasyJet nose ahead in race for Air Berlin
An airplane operated by German airline 'air berlin' and plane of Lufthansa are seen at Tegel airport in Berlin on September 22, 2017 in Berlin, Germany.

Insolvent Air Berlin will decide Monday on the future of its 140 aircraft and 8,000 employees, with Lufthansa, EasyJet and Condor favourites to divide the spoils of the German airline.

Its supervisory board is set to approve at 1300 GMT the shortlist of bidders for Air Berlin's assets agreed among the company's creditors Thursday, with technical details around winding up the carrier to be thrashed out in the coming weeks.

At stake are the carrier's 140 leased aircraft including those wholly owned by Austrian subsidiary Niki coveted landing and takeoff slots at German airports, and some prime Berlin real estate.

Air Berlin triggered bankruptcy proceedings in mid-August after losing a cash lifeline from its biggest shareholder Etihad Airways, giving potential buyers a month to make their offers.

Media reports suggest that large parts of Germany's second-largest airline will be gobbled up by the country's flagship carrier Lufthansa.

In the race to strip down Air Berlin, Lufthansa reportedly beat out IAG owner of Iberia and British Airways and three bids of between 500 million and 600 million euros ($600 million and $715 million) apiece from private investors.

Irish low-cost airline Ryanair stayed out of the bidding as its outspoken chief Michael O'Leary denounced a German "stitch-up" designed to favour Lufthansa.

No resurrection

The German government, which extended a bridging loan to Air Berlin to keep its aircraft aloft, ruled out any one competitor taking over the carrier whole for competition reasons.

That did not stop rivals attacking Lufthansa for what they saw as a grab at monopoly power by the yellow-liveried giant.

"There's a scandal going on here. Lufthansa's monopoly would be cemented by this decision," Bavarian business tycoon Hans Rudolf Woehrl told Handelsblatt business daily on Friday, warning that he could sue the government over its role in the deal.

Frankfurt-based Lufthansa has set its sights on up to 78 aircraft, while EasyJet is reportedly interested in Air Berlin's popular short-haul routes.

"Our top priority is to stabilise operationally the 38 aircraft we've been wet-leasing from Air Berlin over the past few months," Lufthansa chief Carsten Spohr told journalists last week.

"Wet-leasing" refers to airlines leasing aircraft from each other rather than a leasing company.

"We expect Air Berlin to exit the market and for us to be able to grow by 20 to 40 aircraft," Spohr added.

Negotiations between Air Berlin, Lufthansa and EasyJet are expected to continue until October 12.

Also jostling for Air Berlin assets is Thomas Cook subsidiary Condor, which has joined forces with Formula One legend Niki Lauda, setting their sights on 21 planes belonging to the Air Berlin subsidiary that bears his name.

German newspaper Bild and Berlin tabloid BZ reported at the weekend that creditors expected the sale of Air Berlin assets to bring in 250-350 million euros.

Workers in the cold?

Amid concern about job losses, Lufthansa has signalled it could hire up to 3,000 people to go with its new planes, possibly including some from Air Berlin's ranks.

As European low-cost airlines engage in dogfights for control of the skies, trade union Verdi fears that some buyers plan to use their own staff to profit from Air Berlin's aircraft and landing slots, rather than offering existing employees opportunities.

Verdi board member Christine Behle said the union expected the successful bidders to "take on responsibility for Air Berlin's employees and offer them good opportunities for the future".

But the clock is ticking.

Despite the government's 150-million-euro cash infusion, Air Berlin is running on fumes, slashing most long-haul flights and suffering from a recent wildcat strike by huge numbers of pilots calling in sick.

Chief executive Thomas Winkelmann labelled the "sick-out" an "existential threat" to the company.

Air Berlin, which transported 36 million passengers in 2016, has insisted it will operate scheduled flights until bankruptcy proceedings are completed, although some of the winning bids could pose technical problems that would take time to resolve.

Passengers who bought plane tickets after August 15 can be reimbursed for their reservations.

Air Berlin sell-off: what passengers need to know

The 40-year history of Germany's Air Berlin will end in the coming weeks, as its planes and other assets are sold off in bankruptcy proceedings. Here's what passengers need to know:

Is Air Berlin still flying?

Flights are still taking off thanks to an emergency loan from the German government.

The financial stopgap is supposed to last until November, giving bosses time to wind up the company by selling off its planes and takeoff and landing slots to other airlines.

If the plan fails, the company will be liquidated and all flights will be cancelled.

Which flights are affected?

Long-haul flights to Boston, Havana, Varadero in Cuba, Punta Cana and Puerto Plata in the Dominican Republic, Cancun, Curacao, Abu Dhabi, Chicago, Los Angeles and San Francisco have been cancelled.

But Air Berlin is keeping its popular route to New York aloft for the time being.

What if my flight is cancelled?

Only tickets bought from Air Berlin before August 15- the date the airline declared bankruptcy- are eligible for a full refund under insolvency rules.

If you bought tickets before then, there's no chance of a refund unless the flight is cancelled or if the sale of Air Berlin falls through.

If you bought tickets through a tour operator, they generally have insurance to cover cancellations.

What if my flight is cancelled last-minute?

The European Consumer Centre advises passengers to insist on a replacement flight and refuse to pay for any hotel stays that might be necessary.

Travellers should also avoid checking too many bags to avoid complicated damages claims against the insolvent company.

Can I cancel my ticket pre-emptively?

No. Passengers can't break their contract for fear of a possible cancellation of their flight.

Normal cancellation rules apply to customers despite the unusual situation.

Should I still buy flights from Air Berlin?

Airlines in financial trouble often try to sell off tickets at rock-bottom prices online.

"People should know that there's a possibility they will lose their money and that their flight will be cancelled," transport lawyer Eva Klaar told Germany's Bild newspaper.

What about my air miles?

Air Berlin's TopBonus air miles scheme is also bankrupt, with passengers unable to use their points to buy flights.

But they still have the option to trade them in for a limited range of rewards in the airline's online shop.

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