Lufthansa to buy Swiss
German airline Lufthansa is set to acquire Swiss International Airlines after the boards of both airlines, the Swiss government and a large block of Swiss shareholders approved the takeover of the struggling airline Tuesday. The deal is potentially worth 310 million euros ($406 million).
Swiss will continue to operate as a separate airline with a significant amount of autonomy. Lufthansa, Europe’s second-largest airline, said the merger strengthens both airlines by increasing destinations and connections to better serve the flying public, and gives Lufthansa access to the Swiss market. Lufthansa would add Zurich as a long-haul hub to compete with low-cost airlines.
Swiss said it would continue with the restructuring announced in January, and expansion of its Zurich hub and fleet.
To comply with antitrust laws, the Lufthansa takeover of Swiss will take place in phases. Full control, complete with air traffic rights, is not scheduled until 2006 or 2007.
The companies said they expect to realize operational savings from the merger of about 160 million euros ($209.4 million) per year, beginning in 2007.
This is the second merger of major airlines in Europe since 2003, when Air France acquired KLM Royal Dutch Airlines. Many airline analysts say the European market is too saturated with airlines and have called for consolidation.