Lufthansa to buy large parts of bankrupt Air Berlin

Lufthansa to buy large parts of bankrupt Air Berlin

German airline giant Lufthansa has confirmed it will buy a large portion of its insolvent competitor Air Berlin for around 210 million euros ($249 million).

Lufthansa CEO Carsten Spohr had earlier suggested that Lufthansa would purchase 81 of Air Berlin's 144 planes, as well as take on around 3,000 of the company's staff.

Britain's EasyJet is reportedly still in negotiations to buy some of the Air Berlin planes that haven't been snapped up by Lufthansa.

"We will see a milestone in the history of Lufthansa and Air Berlin", Spohr said.

Spohr said that both airlines will sign the agreement later in the day in Berlin.

A person who is familiar with the ongoing situation said Wednesday that Lufthansa, the largest airline in Germany, was going to acquire the Niki, the Austrian leisure travel line of Air Berlin, its regional airline LG Walter, and also some other aircraft that were short-haul.

Shares in Lufthansa were up 3.3 percent at 25.38 euros, the top gainer in Germany's DAX market index 0#.GDAXI by 1340 GMT.

Industry analysts in Europe said they raised ratings on shares of Lufthansa from market-perform to outperform, saying they believe a deal to acquire part of Air Berlin would add between €70 and €90 million in operating profits annually to Eurowings the budget unit of Lufthansa over the medium term.

Air Berlin, Germany's second largest carrier, will cease operating flights this month, capping a turbulent summer for European carriers.

HSBC analysts lifted their target share price to 29 euros from 25 euros (£22.38), citing the imminent agreement with Air Berlin, a new multi-year labour deal with pilots announced this week and a positive trading performance this year. He said in the Rheinische Post that he expects airline competition to get even more intense, and that it's only right that airlines that can't break even should disappear from the market-he gave Monarch in the United Kingdom and Alitalia in Italy as examples.