Lufthansa will sign an agreement Thursday to buy a large part of smaller, insolvent German air carrier rival Air Berlin, said Lufthansa CEO Carsten Spohr.
The CEO said that a milestone in Lufthansa’s history will be seen in Berlin on Thursday.
Air Berlin has struggled in attempting to turn a profit the last 10 years, and on August 15 filed for insolvency and a loan by the government has kept planes flying while the administrator negotiated with potential buyers for different parts of the airline.
Last month it said negotiations it was holding with Lufthansa as well as easyJet, based in Britain, would continue until October 12.
A person who is familiar with the ongoing situation said Wednesday that Lufthansa, the largest airline in Germany, was going to acquire the Niki, the Austrian leisure travel line of Air Berlin, its regional airline LG Walter, and also some other aircraft that were short-haul.
The operations available also include access to slots for taking off and landing at hubs for Air Berlin in Tegel in the capital of Germany as well as Dusseldorf.
Britain’s easyJet has a base in Schoenefeld airport in Berlin and has been negotiating the acquisition of between 27 and 30 aircraft, though one report earlier in the week said those talks might fail.
Lufthansa CEO Spohr said that he expected the imminent deal for Lufthansa with Air Berlin would receive necessary approval from the European Union before the end of 2017.
Lufthansa shares were up over 2.9%, which was the highest mover on the DAX market index in Germany in Thursday morning trading.
Industry analysts in Europe said they raised ratings on shares of Lufthansa from market-perform to outperform, saying they believe a deal to acquire part of Air Berlin would add between €70 and €90 million in operating profits annually to Eurowings the budget unit of Lufthansa over the medium term.
Analysts in London lifted the target price for shares of Lufthansa to €29 from their previous €25, citing the soon to be signed deal to acquire much of Air Berlin, a new labor deal that was multi-year with its pilots that it announced earlier this week, and a strong trading performance for 2017.
Air Berlin, the second largest carrier in Germany, will end all operation of its flights during October, capping a tumultuous summer for carriers in Europe.
The national airline of Italy Alitalia is also in administration and is seeking investors and Monarch the leisure airline based in Britain collapsed at the beginning of October.