It looks like Europe will be losing yet another airline tomorrow. In mid-August airberlin filed for insolvency, after Etihad essentially cut them off. In late October airberlin ceased all operations, so it was just over two months from when they filed for insolvency until they went out of business.
Ever since airberlin’s insolvency was announced, airlines have been bidding for their assets, including slots, plane leases, etc. Lufthansa and EasyJet have been planning on taking over many of airberlin’s assets.
One of the interesting aspects of the deal so far is that Niki, an Austrian low cost carrier that is owned by airberlin, has still been flying. The airline hasn’t filed for insolvency, as they’ve been receiving funding from Lufthansa since October, given that Lufthansa was planning on taking them over.
Well, there has been a change in plans. Niki is ending all operations as of tomorrow, Thursday, December 14, 2017. Per an announcement on their website:
Dear guests,
The flight operations of NIKI Luftfahrt GmbH under IATA-Airline-Code HG will cease as of December 14th.
Passengers who have booked their flight with a tour operator are kindly asked to contact their tour operator directly. The tour operator is responsible to accommodate his passengers.
Several Airlines are currently looking into solutions for bringing back passengers on standby-basis for a small fee from abroad destinations back to Germany, Austria and Switzerland. To our regret, TUIfly will not participate in this solution.
We would like to thank you for your long-standing loyalty.
Your NIKI-Team
What caused this is that the European Commission has said that they won’t approve Lufthansa’s takeover of Niki over concerns of lack of competition. As a result Lufthansa has withdrawn their bid for Niki. Since they’ve singlehandedly been financially supporting Niki, this means the airline is done with.
According to Reuters:
Lufthansa said it had offered to give up take-off and landing slots in order to get the deal approved, but that the European Commission considered that to be insufficient.
“It was clear from the start that Lufthansa and Air Berlin overlap on a very significant number of routes, with clear risks to Austrian, Germans and Swiss consumers and to effective competition,” the Commission said.
While I can appreciate the European Commission trying to ensure competition, I think we can all agree that this decision unfortunately has the opposite effect, as Niki’s fleet of 23 Airbus A321s won’t be flying anymore tomorrow. Now Lufthansa’s plan is to basically replicate Niki’s route network with their Eurowings division. Instead of spending money buying Niki, they’ll instead use that money to grow in Niki’s former markets. Heck, in many ways this is the best case scenario for Lufthansa — they eliminate a competitor and can replicate what they’re doing at a discount.
I feel bad for Niki’s employees, who will be out of jobs as of tomorrow, as well as the tens of thousands of people booked on Niki who will now be stranded (especially leading up to the busy holiday travel season).
Looking forward to Brexit
This is weird. I had a ticket from Gran Canaria to Berlin on Eurowings in February that it got cancelled Yesterday “due to operational reasons” there was another flight with Nikki that they were still selling as of yesterday now the only direct flight is on Ryan Air at 7:00 am. Other days have 5 or 6 direct flights with different airlines but the day of my flight only has one I don’t understand why they cancelled the Eurowings flight.
@callum I think what Lucky, and others, are getting at, is that LH is perfectly positioned to move in on that network. It's not like Norwegian (as an example of 'any airline') could just create that network in a month or so. First mover here really has an advantage.
Don't forget about the 150 million Euro loan from the federal republic of Germany to airberlin, which was meant to be payed by Nikis earnings. The government is indeed paying on top of this (plus all the support for unployment etc)
Let me get this straight. The "experts" on here GENUINELY believe that the following are the exact same thing with regards to the amount of competition:
Scenario 1 - Nikki becomes Lufthansa.
Scenario 2 - Nikki collapses and any airline is now free to move in and compete over newly vacant routes.
The mind boggles...
@Justin H - :D
Niki from Austria ? Gday mate. Throw another shrimp on the barbi
I'm a EU Competition lawyer, though I don't do merger filings. Interesting to note that the undertakings did not raise a 'failing firm defence'. My guess is that they did not pass the very strict legal test involved. See https://www.oxera.com/Latest-Thinking/Agenda/2014/The-failing-firm-defence-a-get-out-of-jail-free.aspx
Hainan-Airlines-To-Fly-Oslo
@Marshall, that seems like a gross oversimplification. Competition laws are there for a reason and it's hard to argue that the situation would be any different if Niki were to survive as a Lufthansa subsidiary. It really would make no difference to the flying public.
Those routes will be replaced one way or another. Nothing is keeping easyJet or others from jumping in on the vacant market capacity and competing.
With Air Berlin and Niki gone, at least Berlin-Tegel will become less congested.
That's exactly what LH management and the German government planned for, a super monopoly for LH. The LH bid for Niki was very clearly breaking EU law, but it helped to turn down other bidders, including IAG and Thomas Cook.
At this late stage, the other bidders are no longer interested (understandably) and LH can more cheaply aquire 20 more planes and staff without the airline.
In most countries, the insolvency administrator would be prosecuted...
That's exactly what LH management and the German government planned for, a super monopoly for LH. The LH bid for Niki was very clearly breaking EU law, but it helped to turn down other bidders, including IAG and Thomas Cook.
At this late stage, the other bidders are no longer interested (understandably) and LH can more cheaply aquire 20 more planes and staff without the airline.
In most countries, the insolvency administrator would be prosecuted for such a manoeuvre, but rest assured that the German government, which is part of the plot, will protect him. That's how corruption works in Germany ...
According to Austrian media reports Niki Lauda, the founder and former majority shareholder, is interested in buying the airline out of insolvency. Would be great for the employees and it also has quite good chances in making a profit as Niki has always been the only part of Airberlin that actually made money.
@Endre - I believe Nika Lauda sold his interests in this airline quite a while ago. He is known to be a very shrewd businessman, so it's sad to see something that he created disappear.
So the EU can stop LH from buying and divesting in Niki and saving the airline and jobs? But now LH is free to add all of the capacity that it wants to in Austria? Wow! So bascially the EU is just useless and hasn't got a clue about business or competition. Now wonder people want to withdraw from the EU.
This will give LH a stranglehold on traffic in Germany and Austria as well as other places.
Niki Lauda, my all time favorite F1 driver. Sportsmanship, passion and talent...
Nicely done, EU beurocracy!