Etihad In Advanced Talks Over LOT Stake

By Jens Flottau jens.flottau@aviationweek.com
Source: AWIN First

An Etihad investment in the airline could actually make that approval easier because the Polish government could argue they needed the investment to prepare LOT for the sale and they acted as a private investor under normal market economy conditions. The European Commission generally does not consider such an investment to represent state aid. In other recent cases such as Air Berlin and Air Serbia, Etihad has provided financing to its new subsidiaries as part of the equity investment arrangements. If Etihad did the same for LOT, it would justify funding by its existing owner even more.

A tie-up with Etihad is raising serious concerns at Lufthansa and Star Alliance, however. A senior Lufthansa delegation is understood to be meeting with LOT CEO Sebastian Mikosz soon to discuss the situation. Etihad’s entry would not necessarily mean LOT will leave Star Alliance—Air Berlin is still a member of Oneworld—but priorities are shifting towards network synergies with its new shareholder.

Separately, industry sources claim Air Berlin is looking at selling its MRO division Air Berlin Technik. This would be another and one of the last remaining sources of financing for the cash-strapped carrier. The airline has done multiple sale and lease back deals for aircraft and sold a majority stake in its frequent flyer program to Etihad. Etihad and Air Berlin have said they are looking at synergies including at MRO and want to pool resources for the combined Boeing 787 fleet.

Air Berlin denies it plans to sell the division, but maintenance is one area that needs urgent attention. In the first quarter of 2013, technical costs increased by 16.4% at a time when the airline cut capacity further. Air Berlin is presenting its first half results on August 15.


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