Niki, a subsidiary of bankrupt Air Berlin, was grounded yesterday after Lufthansa dropped a deal to buy and operate the airline’s routes. As many as 800,000 tickets are now worthless, and 10,000 passengers will be stranded in the next two weeks as Christmas approaches.
Niki, which is based in Austria and was founded by racing driver Niki Lauda, had been able to keep flying on funding from Lufthansa, pending closing the deal. With the deal gone, the money (and the planes) stopped. Austrian and German officials are working on plans to get Niki flyers now at their destinations home again, possibly with charter flights.
Lufthansa dropped the deal to buy the planes and routes after the European Commission indicated it would not approve the deal because it would sharply reduce airline competition in Germany. Lufthansa offered various trade-offs, including giving up some routes and slots, but it was told it was not enough.
The airline will continue with a deal to buy another AB subsidiary, LGW, which operates mainly domestic flights in Germany. Lufthansa had planned to incorporate both into its Eurowings low-cost subsidiary. A separate deal, in which EasyJet will buy Air Berlin’s slots and operations at Berlin’s Tegel Airport, was approved by the Commission.
The Air Berlin bankruptcy administrators tried quickly to find another buyer for Niki, but neither British Airways parent IAG nor Thomas Cook Airlines came to a deal. Meanwhile, Lufthansa says it will use the money it would have paid in the Niki deal to grow Eurowings on its own.
The German government is also involved in the deal: Air Berlin’s last few months of operations were financed by a €150 million government loan, which was to be repaid from the sale of the assets. The original Lufthansa deal was valued at about €210 million, but the new LGW deal will be only about a tenth of that. EasyJet will pay €40 million, but Germany will still take a sizable loss on the loan unless another buyer can be found.
Ryanair originally had an interest in parts of the deal, but dropped out of the bidding, charging that it was rigged to favor Lufthansa. While it might still have an interest, in the meantime it has been scarred by errors, service cancellations and more, and is now facing possible Christmas-time pilot strikes, so it is not likely to emerge as a white knight in this situation.
