Lufthansa Group is permitted by German competition regulators to acquire shares in minority shareholders of Latvian airline Air Baltic, despite concerns about the impact on certain routes.
Earlier this year, Lufthansa revealed that a convertible 10% stake in the airline would be required ahead of the planned stock issue.
Lufthansa does not control Airbarth, but under German law, minority shares are sufficient to tackle competition scrutiny.
Federal Bundeskartellamt acknowledges that the acquisition poses “significant competitive concerns” to “several routes” between Germany and the Baltic countries, given the lack of alternative operators.
But Bundeskartellamt President Andreas Mundt said regulators “cannot intervene” because the affected routes generate “very low revenue.”
On routes with less economic importance, domestic sales are less than 20 million euros ($23.6 million), with “minimum” market clauses applied to merger management and partnerships cannot be blocked.
This means the acquisition “had to be approved,” says Mundt.
The Lufthansa Group has the power to make decisions on Airvalt's strategy, and the two operators agreed to expand the wet lease activities in which Airvalt supplies Airbus A220 aircraft to Luftansa.
Although the wet lease agreement does not cause any problems, Bundes Carteramut nevertheless believes Luftanza will “have a major competitive impact” on Air Barth.
“Air Baltic is expected to take a significant consideration of the benefits of (Lufthansa) in decision-making,” he said.
“But businesses remain legally independent.”
It warns that direct adjustments and anti-competitive agreements between them “remains banned.”
