Air Transport World

LTU goes Swiss.

SAirGroup equity spins German carrier into newly formed European Leisure Group

Something had to happen. LTU International Airways nervously observed the competition gradually combining resources in the hotly contested European leisure-travel marketplace while embattled LTU Group was starting to lose ground. And money.

The group basically was treading in place with its 5,305 employees, 2,876 of whom work for the airline, which flies seven Airbus A330-300s, six Boeing 767-300ERs and 12 757-200s. It also has an A320 and six 737-700s on short-term lease from Germania Airways for expanding short-haul links.

Concurrently, powerful Dusseldorf-based Westdeutsche Landesbank was being pressured by German competition watchdogs to reduce its 34.3% stake in LTU because of WestLB's conflicting major involvement with Preussag AG and its competing Hapag-Touristik Union (HTU), Europe's largest travel concern.

In stepped Swissair parent SAirGroup, which took a 49.9% equity stake and effective operational control as of Jan. 1, pumping new life into LTU as a major part of the newly formed European Leisure Group, which comprises 110 aircraft that fly 15.6 million passengers to 130 destinations each year.

Under terms of the phased transaction, previous shareholders of LTU Group--WestLB and several private investors- together sold 49.9% of the group to LW Holding, a new subsidiary of SAirGroup. LTU's remaining 50.1% equity is to be brought into the holding company in a follow-up phase; German-based investors will assume a 39.9% share of LW Holding and WestLB 10.2%, ensuring that the majority of shares are in German hands as prescribed by European civil aviation rules.

We Swiss cannot grow much more within our home market," declared outgoing SAirGroup Chairman Hannes Goetz in Zurich, expressing the obvious. Without a Swiss bilateral with the EU, "we first developed the Qualiflyer Group of 10 member airlines concentrating on scheduled services. Now we've shifted attention to the charter and leisure travel business to create a similar European grouping in a sector with above-average growth potential."

The goal is to establish a multihub leisure-airline network blanketing Europe, with connecting flights "guaranteed" by the Qualiflyer alliance. …

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