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Lufthansa purchase of Swiss gets EU approval

Nothing now stands in the way of Lufthansa's takeover of Swiss

(Keystone)

The European Union has removed the last hurdle to German airline Lufthansa’s takeover of national carrier Swiss, giving a conditional green light to the deal.

The companies welcomed the decision, saying the approval would consolidate Lufthansa’s position as a major global airline.

EU regulators said on Tuesday that the go-ahead was conditional on the two companies giving up slots at several airports including their hubs in Zurich and Frankfurt.

The European Commission set similar conditions last year for Air France’s takeover of Dutch carrier KLM.

EU competition officials said beyond these concessions the deal would not significantly impede effective competition in the continent’s airline sector. The approval comes after antitrust regulators in the United States gave their unconditional clearance to the deal over the weekend.

The two airlines have agreed to give up additional slots at Munich, Düsseldorf, Berlin, Vienna, Stockholm and Copenhagen, after the commission’s investigation showed competition on routes to those airports would be reduced "significantly" due to the takeover of Swiss.

EU Competition Commissioner Neelie Kroes said in a statement the takeover of Swiss, which has suffered massive financial problems since it was created out of Swissair in 2002, should not lead to higher prices or reduced choice of carrier.

The investigation found that competition was reduced the most on the Zurich-Frankfurt and Zurich-Munich routes and also said that competition on long-haul routes to the United States, South Africa, Thailand and Egypt was also affected.

Milestone

To boost competition, the airlines have pledged to offer slots on the Frankfurt and Munich routes to new operators. A total of 41 round-trips a day will be available for competing airlines on the routes concerned.

The EU also got assurances from the Swiss Federal Civil Aviation Office that it would give traffic rights to other carriers wanting to stop over in Zurich on flights to the US or other non-EU destinations.

Lufthansa, Europe's third-largest passenger airline behind British Airways and Air France-KLM, announced in March it would buy troubled Swiss, which has racked up losses of SFr2 billion ($1.64 billion) since its creation three years ago.

"These regulatory approvals mark a further milestone on our joint journey forward," said Wolfgang Mayrhuber, Lufthansa’s chief executive officer.

Christoph Franz, CEO of Swiss, was also pleased with the outcome.

"The green light from Brussels and Washington gives us the opportunity to ensure the long-term future of the air transport connections that are so crucial to Switzerland and its economy," he added.

Lufthansa has said it wants to acquire Swiss to expand its international network and boost its competitive position in Europe.

The German airline is paying up to €265 million (SFr411 million) to Swiss’s major shareholders – the Swiss government and major companies – and about €45 million to individual investors whose shares are in free float.

swissinfo with agencies

Key facts

Lufthansa is acquiring Swiss for around €310 million.
The German airline expects to have fully completed the takeover some time next year at the earliest.

end of infobox

In brief

In October 2001, management decisions and errors lead to the grounding of national carrier Swissair and the collapse of its parent company, SairGroup.

The government and business figures then draw up plan aimed at salvaging a national company from the disaster.

With government backing, Swiss is launched on March 31, 2002.

Three years after getting off the ground, the airline announces its takeover by Lufthansa.

end of infobox


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