Lufthansa in talks with SAS and Brussels Airlines to spread Eurowings

Lufthansa is in talks with SAS and Brussels Airlines to expand the number of destinations it flies to and grow its low-cost Eurowings business.

Image copyright: Aircraftspotting.deimage

Sources said on Wednesday that Lufthansa has been in talks with SAS since the autumn, which could lead the German airline taking a stake in the Nordic airline or some kind of partnership. 

Lufthansa has launched its low-cost carrier Eurowings to compete with companies like Ryanair and EasyJet. It has said it aims to use it to bundle various subsidiaries and brands.

One of the sources said that it is almost sure Lufthansa will present a deal to buy the 55% in Brussels Airlines it does not already own during the board meeting on April 27.

A full takeover of SAS by the German company is unlikely, but taking a minority stake would come with a board seat and direct influence on SAS’ strategy. One of those people said that “Lufthansa wants to build Eurowings, but it doesn’t want to take the risk to restructure the airline”.

Brussels Airlines, instead is attractive for Lufthansa because of the business flow through the Belgian capital and because the Belgian airline has a strong North African network, where the Germans are not well set up.

SAS expects to swing a profit this year and has said it wants to play an active role in consolidation in Europe.

Lufthansa, due to have the annual shareholder meeting on the 28th of this month, has been a partner since the creation of Star Alliance and has continously been in talks with them since then.

Lufthansa bought 45% of Brussels Airlines, but has an option to buy the remaining 55% by 2018. The total cost of the operation would be around €250 million, depending on the airline’s performance.

Lufthansa’s CFO said that the German airline would like to “come to a conclusion” on Brussels airlines this year, with progress in the second quarter.

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