LH's CEO on the EU conditions regarding SN's take-over

[tolipanebas]

In relation to Lufthansa's take-over bid for Brussels Airlines and the weird conditions set by the EU, Lufthansa's CEO Mayrhuber had this to say in an interview with 'der Spiegel':

In the case of Brussels Airlines, we've been asked to meet conditions that are economically impossible to fulfill, yet give the Commission full legal security. Now the wheels of the bureaucracy in Brussels are continuing to turn. There are two camps there. One of these has recognized that the European Union must rapidly create structures so we can hold our own over the long term with competitors, for instance, from the US and Asia. The other camp believes that there is a risk of monopolist profits and that every single mini-route must be flown by at least two carriers to avoid monopolies, but that's wrong! There are many routes in Europe that only have room for one airline. If LH flies on a route alone, that doesn't make it a monopoly. It often merely means that it's worthwhile for only one carrier.

Full article: http://www.spiegel.de/international/bus ... 44,00.html

[BrightCedars]

Isn't the US deregulation an example good enough for the EU to see that the consequence is 1st: Wild West competition and maxed out body count, 2nd consolidation into a few much larger carriers that compete or not and are just about to break even in most cases?

For coming out in public like that he must be kind of pissed to use this tactic. Not sure the EU will like it.

[tolipanebas]

For coming out in public like that he must be kind of pissed to use this tactic. Not sure the EU will like it.

He's doing it because the take-over of AUA by LH is most likely going to see similar EU concerns and restrictions imposed and there he made it perfectly clear that f the EU does not show more flexibility, LH will just walk away from the deal in VIE....

In the end he's 100% right: the EU seems so obsessed with fighting pseudo-monopolies on the internal mini-routes (funny word he introduced there BTW) even if their existance is just a logic consequence of the free market at work, that they've lost the bigger picture from sight and are forcing several intercontinental carriers to cut deeper than needed in their routes and structures, or even shut down completely, whereas they could easily be saved if only they were allowed to integrate and work together...

Who cares about protecting tens of thousands of jobs, the overall profitability of the industry, a wider choice of intercontinental routes and the convenience of having some very strong EU network airlines on the global scene, if you can stimulate overcapacity (and thus ultimately also chronically deficiency like in the US) on domestic miniroutes in return for it all, right?

Seems the EU has been infected with the same provincial thinking as regional governements in Belgium, with the only difference being the size of their province.

[JOVAN]

In relation to Lufthansa's take-over bid for Brussels Airlines and the weird conditions set by the EU, Lufthansa's CEO Mayrhuber had this to say in an interview with 'der Spiegel':

In the case of Brussels Airlines, we've been asked to meet conditions that are economically impossible to fulfill, yet give the Commission full legal security. Now the wheels of the bureaucracy in Brussels are continuing to turn. There are two camps there. One of these has recognized that the European Union must rapidly create structures so we can hold our own over the long term with competitors, for instance, from the US and Asia. The other camp believes that there is a risk of monopolist profits and that every single mini-route must be flown by at least two carriers to avoid monopolies, but that's wrong! There are many routes in Europe that only have room for one airline. If LH flies on a route alone, that doesn't make it a monopoly. It often merely means that it's worthwhile for only one carrier.

Full article: http://www.spiegel.de/international/bus ... 44,00.html

This Dutch old lady Kroes was far more lenient for AF/KLM absorbing Martinair, Transavia, creating a big monopolistic bloc at Schiphol, ... Europe ???

Hope for a big fight , ending with a SEVERE defeat of European bureacrats.

[beaucaire]

If the average citizen has still not discovered the truth about the Brussels bureaucray- I can't help them.
It's a nest of "profiteurs" ,lobbyists,black-mailers and crooks.Nothing positive will ever come out of those egg-heads brains.It's -what we call in French "..une usine a gaz"..- a generator of hot air that costs billions and serves nobody.If you analyse the amount of funds wasted in useless meetings that comes up with new proceedures that are absolutely absurd...
One could achive better results with less than a third of the staff ..

[Vinnie-Winnie]

If the average citizen has still not discovered the truth about the Brussels bureaucray- I can't help them.
It's a nest of "profiteurs" ,lobbyists,black-mailers and crooks.Nothing positive will ever come out of those egg-heads brains.It's -what we call in French "..une usine a gaz"..- a generator of hot air that costs billions and serves nobody.If you analyse the amount of funds wasted in useless meetings that comes up with new proceedures that are absolutely absurd...
One could achive better results with less than a third of the staff ..

Wow wow wow careful what you say here! After all it is the same Brussels bureaucracy that allowed openskies inside the EU, which in turn brought cheap travel to U, me and everybody!

before writing such simplistic thoughts, look at what it brought you instead of criticizing it! And if there is an issue about competition between Belgium and Germany, can't see the problem with delaying approval in order to ask further questions!

[JOVAN]

If the average citizen has still not discovered the truth about the Brussels bureaucray- I can't help them.
It's a nest of "profiteurs" ,lobbyists,black-mailers and crooks.Nothing positive will ever come out of those egg-heads brains.It's -what we call in French "..une usine a gaz"..- a generator of hot air that costs billions and serves nobody.If you analyse the amount of funds wasted in useless meetings that comes up with new proceedures that are absolutely absurd...
One could achive better results with less than a third of the staff ..

Wow wow wow careful what you say here! After all it is the same Brussels bureaucracy that allowed openskies inside the EU, which in turn brought cheap travel to U, me and everybody!

Forgot how hard they tried to kill Ryanair ???
Unsuccesfully , thanks God.

Since long I lost my confidence in this European circus, populated with 3rd and 4th class politicians.

[LJ]

If the average citizen has still not discovered the truth about the Brussels bureaucray- I can't help them.
It's a nest of "profiteurs" ,lobbyists,black-mailers and crooks.Nothing positive will ever come out of those egg-heads brains.It's -what we call in French "..une usine a gaz"..- a generator of hot air that costs billions and serves nobody.If you analyse the amount of funds wasted in useless meetings that comes up with new proceedures that are absolutely absurd...
One could achive better results with less than a third of the staff ..

However this would hurt Brussels Airlines revenues as those lobbyists, black mailers and crooks all fly in and out of BRU on a regular basis.... If there is one airline who shouldn´t complain about the EU it would probably be SN....

Furthermore, be glad that someone looks at possible anti-competitive consquences of a merger or alliance. If not I can assure you that we would have much less choice and much less low fares (and this is not just in the airline business). Or do you really believe that "the market" will solve any problem... Sorry, but I don´t.

We, those who aren´t involved in the case, can´t judge as the information on which the EU bases such information is not publicly available. This means we only know one side of the story (in this case the story of LH/SN). I personally do believe that the LH CEO is doing its "normal" PR thing in commenting on the EU´s descision. His views are, off course, biased towards favouring the deal.

[fcw]

In relation to Lufthansa's take-over bid for Brussels Airlines and the weird conditions set by the EU, Lufthansa's CEO Mayrhuber had this to say in an interview with 'der Spiegel':

In the case of Brussels Airlines, we've been asked to meet conditions that are economically impossible to fulfill,

I am afraid Lufthansa might be thinking about not buying BruAir anymore. They EU could give the ideal excuse.

[BrightCedars]

I am afraid Lufthansa might be thinking about not buying BruAir anymore. They EU could give the ideal excuse.

It could also be that LH has now discovered what lies beneath and is ready to jump on any excuse to get out of the deal in its present form. Although I seriously doubt there would be anything as bad as OS or SK in SN's closet.

I can't agree to a clear-cut position on the EU as Beaucaire, but there is certainly room for improvement, much as in most large - and sometimes smaller or even very small - organizations.

[Atlantis]

I don't understand the position Europe took in this case. KLM - AF (no competition between the two countries), LH - LX (no competion between the two countries). What's the difference when LH will take over SN. Do they want more competion?? Air Berlin was asking several times slots but never came, Easyjet is not expanding between Brussels and Germany.

How can you develop a decent airport when the federal government is incompetent and Europe is asking things who are not possible?? I don't know.

[JOVAN]

I don't understand the position Europe took in this case. KLM - AF (no competition between the two countries), LH - LX (no competion between the two countries). What's the difference when LH will take over SN. Do they want more competion?? Air Berlin was asking several times slots but never came, Easyjet is not expanding between Brussels and Germany.

How can you develop a decent airport when the federal government is incompetent and Europe is asking things who are not possible?? I don't know.

I have same opinion. Europe,.. our Federal govt. My God, how low can we fall ??

[bxleu]

If the average citizen has still not discovered the truth about the Brussels bureaucray- I can't help them.
It's a nest of "profiteurs" ,lobbyists,black-mailers and crooks.Nothing positive will ever come out of those egg-heads brains.It's -what we call in French "..une usine a gaz"..- a generator of hot air that costs billions and serves nobody.If you analyse the amount of funds wasted in useless meetings that comes up with new proceedures that are absolutely absurd...
One could achive better results with less than a third of the staff ..

Totally off topic and quite inappropriate on this kind of website!!!!
Please try to keep this forum free of such comments!

[Vinnie-Winnie]

However this would hurt Brussels Airlines revenues as those lobbyists, black mailers and crooks all fly in and out of BRU on a regular basis.... If there is one airline who shouldn´t complain about the EU it would probably be SN....

Furthermore, be glad that someone looks at possible anti-competitive consquences of a merger or alliance. If not I can assure you that we would have much less choice and much less low fares (and this is not just in the airline business). Or do you really believe that "the market" will solve any problem... Sorry, but I don´t.

We, those who aren´t involved in the case, can´t judge as the information on which the EU bases such information is not publicly available. This means we only know one side of the story (in this case the story of LH/SN). I personally do believe that the LH CEO is doing its "normal" PR thing in commenting on the EU´s descision. His views are, off course, biased towards favouring the deal.

Exactly!

Welcome to Belgium, where people don't realise that they are even more narrow-minded that their own government!

Going back to the topic Brussels as we shall call may well ask for further slots to be made available to competitors! So the take-over may well go through, just with conditions that may well not be fulfilled, but which anyway will have given competition a chance!

[tolipanebas]

Brussels as we shall call may well ask for further slots to be made available to competitors! So the take-over may well go through, just with conditions that may well not be fulfilled, but which anyway will have given competition a chance!

The point of frustration however is not that LH-SN has to offer slots, but that the EU also wants them to come up with interested parties to take those slots! As such the EU wants them to organize competition themselves, because they know that despite all their good intentions and smart talk, the mechanisms of the market are such that there likely isn't going to be anybody else interested in these routes, especially not in today's economic climate. As such the idea of full-scale competition on each of these routes is nothing but a dream really, a dream which the EU wants to see materialize anyway and for which it expects LH-SN to offer incentives!

How hard is it to find a competitor on routes like BRU-HAM or BRU-MUC in today's economic climate, you think? Even finding extra competition on BRU-BER, BRU-ZRH or BRU-GVA isn't going to be easy (pun intended), as Easyjet could have added flights if they'd wanted (they've been granted slots several times in the past by BRU for such routes), but always failed to pick them up!

What the EU wants is LH-SN to come up with something like this:
Find us a small regional airline, (let's assume OLT) willing to fly for instance HAM-BRU twice daily with one of their metros or saabs and subsidize them for let's say the next 2 years so they will guaranteed brake even on the route and not disappear after just a short while... Then the EU can give the go-ahead to SN-LH and content itself that it has safeguarded competition on the miniroutes it seems to be obsessed with, competition which in fact is nothing but a privately subsidized operation (ironically this is the kind of operations EU fights if they are funded with public money!) and which will most likely be axed as soon as the guaranteed feeding from LH-SN expire!

This has nothing to do with allowing the free market to do its work and preventing monopolies to emerge; this is the classic mechanism of state-organized airlinks created on lines without sustainable demand for them. The only difference being that the money for it has to be forked out by the other airline flying the route! And as such this airline is punished for having found a niche and being successful on it.

If the EU is going to force all of its airlines to sponsor competitors on each and every intra-EU route they now happen to serve under a 'de facto' monopoly, then the well-run market-oriented airlines in Europe are in for some heavy losses.