Paella or pizza? Lufthansa eyes the menu
FRANKFURT: Cash-rich Lufthansa is still weighing up the benefits of making a bid for either Iberia or Alitalia as prospects grow for further consolidation of European airlines.
British Airways, which owns 10 per cent of Iberia, is mulling over a bid for the Spanish airline using private equity partners, while Russia’s Aeroflot is also tracking Alitalia.
Lufthansa is taking a cautious approach because a bid for either airline would present several challenges. Lufthansa CEO Wolfgang Mayrhuber said Iberia was over-priced and in the wrong alliance (oneworld rather the Star Alliance).
Any purchase of Alitalia would encumber the buyer with onerous, government-imposed conditions on employment and domestic services that would make it difficult for a new owner to cut jobs and introduce other efficiencies aimed at making Alitalia profitable.
Mayrhuber said at the weekend that it was crucial that the power of the Lufthansa brand was maintained and was not diluted by acquisitions of other airlines.
Mayrhuber added, “Both airlines fit us well, but the conditions must be right. We don’t want a millstone round our neck.”
Alitalia is reported to be losing US$1.6 million a day.
Mayrhuber said Lufthansa would not be rushed into buying other airlines at a time when an agreement to liberalise European skies was presenting other challenges.
Lufthansa and Aeroflot might also be paying attention to the words of Guido Rossi, the Telecom Italia chief forced out in a boardroom putsch. Over the weekend, he said Italy is a pathological disaster area with the business culture of Chicago in the 1920s.
He told the UK’s Daily Telegraph, “I’ve been through six months of hell. I’ve abandoned all illusions that Telecom Italia can be saved, any more than Italian football can be cleaned up.
“I have seen some dramatic moments for the Italian economy in my life, but this affair really is the pits. Do foreigners realise what they are getting into with this country?” he said.
Ian Jarrett
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