Ryanair CEO hits out at Air Berlin/Lufthansa deal

BERLIN (Reuters) - Ryanair RYA.I sees any plans by Lufthansa LHAG.DE to take over parts of insolvent rival Air Berlin AB1.DE as a "conspiracy" to halt the Irish carrier's expansion, its chief executive told Reuters.

FILE PHOTO: Ryanair CEO Michael O'Leary attends a news conference in Rome, Italy, June 27, 2017. REUTERS/Alessandro Bianchi/File Photo

Air Berlin on Tuesday filed for insolvency after shareholder Etihad said it would not provide more funding, turning to the German government for a 150 million euro ($176 million) loan to keep planes in the air while it negotiates a sale of parts of its business to Lufthansa and one other airline.

Ryanair has already filed a complaint with German and European Union competition authorities over the insolvency process, which it describes as a “conspiracy” because it believes that Lufthansa will gain a bigger share of the German market.

“All this is down to prevent Ryanair growing in Germany, but it won’t stop us,” Michael O’Leary told Reuters in a telephone interview on Wednesday.

Germany has rejected Ryanair’s claims.

A German economy ministry spokeswoman said a bridging loan of 150 million euros ($175.5 million) the government had granted Air Berlin did not breach anti-trust rules.

“I reject the accusation by Ryanair today that it was a staged insolvency application,” the spokeswoman said.

A spokesman for Lufthansa declined to comment on the Ryanair accusations.

Germany faces allegations of maintaining a cosy relationship with its domestic industry and questions about whether authorities did enough to uncover an emissions scandal at carmaker Volkswagen VOWG_p.DE, which is partially state-owned.

Air Berlin said it had sounded out the German states of North-Rhine Westphalia and Berlin in June to see whether they would provide loan guarantees after Etihad signalled it was rethinking its strategy of holding minority investments in smaller carriers.

The German economy ministry spokeswoman said that negotiations between Lufthansa and Air Berlin had been going on for “months” as executives sought a long-term solution for the airline.

The German government said it expected no anti-trust issues because Air Berlin would be sold off in bits.

But O’Leary is not convinced his airline is being given a fair chance.

“A merger will take Lufthansa from 68 percent to 95 percent of the German domestic market and from 47 percent to 60 percent control of the total German market, which would be in breach of every known competition threshold rule and guideline in Germany and the EU,” O’Leary said.

He said Alitalia’s insolvency was being done on a fairer basis, with rival airlines being invited to submit offers.

“That’s the process they should be going through with Air Berlin,” he said.

When asked if Ryanair could bid for Air Berlin assets, he said he expected a deal would go through too quickly to give Ryanair a chance to bid and that only unattractive airport slots would be offered up.

“There’s nothing to bid for, it’s a ready-up,” he said. “We will continue to grow, we’re still buying more aircraft. But we will struggle to get slots, to base more aircraft in airports like Frankfurt, Berlin, Munich.”

O’Leary said he hoped the EU authorities would step in to force competition remedies, such as giving up airport slots to rivals.

The EU Commission said it was in “constructive contact” with Germany. “We are confident that solutions can be found within the framework of EU law,” a Commission spokesman said.

Izzet Sinan, partner at law firm Morgan, Lewis & Bockius said it was no surprise that Ryanair had voiced its objections.

“The question is what actions will follow the words,” Sinan said.

($1 = 0.8540 euros)

Additional reporting by Foo Yun Chee in Brussels; Editing by Maria Sheahan and Jane Merriman