Lufthansa eyes struggling Etihad partner Airberlin after reporting best ever first half

Lufthansa is interested in taking more ‘wet lease’ aircraft from Airberlin, a partner airline of Abu Dhabi-based Etihad Airways. (Reuters)
Updated 03 August 2017
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Lufthansa eyes struggling Etihad partner Airberlin after reporting best ever first half

LONDON: Lufthansa wants to lease more aircraft from Airberlin, the struggling partner of Abu Dhabi’s Etihad Airways.
The German flag carrier would also be interested in taking part of the Airberlin business under the right conditions, as Etihad reviews its so-called equity alliance strategy that saw it invest in struggling European carriers including Airberlin and Alitalia.
Lufthansa chief financial officer Ulrik Svensson made the disclosure on an analyst call after the carrier reported the best first-half results in its history.
It comes just weeks after Etihad sold its minority stake in European regional carrier Darwin Airline, the first divestment since launching a strategic review.
“We are looking at a number of different scenarios when it comes to Airlberlin, and we would indeed be interested to take on more wet leases,” Svensson said on Wednesday.
“We are very interested in Airberlin, and if the right conditions are there we would be interested in taking part of their business of course.”
Etihad’s minority stakes in its codeshare partners, which include Airberlin and Italy’s Alitalia, have come under scrutiny as the Abu Dhabi-based carrier grapples with losses.
Etihad last week reported a net loss of $1.87 billion for 2016, despite carrying record passenger numbers, as losses from some of its equity alliance partners hit home.
It took total impairments of $1.9 billion, including an $808 million charge on exposures to equity partners, mainly related to Alitalia and Airberlin.
Svensson said three main challenges remain around an investment in the low-cost carrier: Its cost base, debt pile and potential cartel issues. He ruled out any interest in Alitalia, but said the wider Italian aviation market holds potential.
The Italian government has invited non-binding offers for Alitalia, which has been beset by persistent financial woes and industrial relations strife.
The airline collapsed into administration in May, more than two years after former Etihad chief executive James Hogan pledged to “reinvent” the struggling Alitalia brand.
The Italian government has agreed to spend €600 million ($709.8 million) keeping Alitalia afloat for six months, and hopes to find a buyer by year-end.
While as many as 10 parties have submitted non-binding bids, some are believed to be driven by gaining intelligence rather than representing serious interest.
Lufthansa raised its profit target for the year to above last year’s €1.75 billion. Other European carriers, including British Airways owner IAG and low-cost carrier EasyJet, have also boosted profit targets.


Libya’s National Oil against paying ‘ransom’ to reopen El Sharara field

Updated 14 December 2018
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Libya’s National Oil against paying ‘ransom’ to reopen El Sharara field

  • Ransom payment would set dangerous precedent
  • NOC declared force majeure on exports on Monday

BENGHAZI: Libya’s state-owned National Oil Corp. (NOC) said it was against paying a ransom to an armed group that has halted crude production at the country’s largest oilfield.
“Any attempt to pay a ransom to the armed militia which shut down El Sharara (oilfield) would set a dangerous precedent that would threaten the recovery of the Libyan economy,” NOC Chairman Mustafa Sanalla said in a statement on the company’s website.
NOC on Monday declared force majeure on exports from the 315,000-barrels-per-day oilfield after it was seized at the weekend by a local militia group.
The nearby El-Feel oilfield, which uses the same power supply as El Sharara, was still producing normally, a spokesman for NOC said, without giving an output figure. The field usually pumps around 70,000 bpd.
Since 2013 Libya has faced a wave of blockages of oilfields and export terminals by armed groups and civilians trying to press the country’s weak state into concessions.
Officials have tended to end such action by paying off protesters who demand to be added to the public payroll.
At El Sharara, in southern Libya, a mix of state-paid guards, civilians and tribesmen have occupied the field, camping there since Saturday, protesters and oil workers said. The protesters work in shifts, with some going home at night.
NOC has evacuated some staff by plane, engineers at the oilfield said. A number of sub-stations away from the main field have been vacated and equipment removed.
The occupiers are divided, with members of the Petroleum Facilities Guard (PFG) indicating they would end the blockade in return for a quick cash payment, oil workers say. The PFG has demanded more men be added to the public payroll.
The tribesmen have asked for long-term development funds, which might take time.
Libya is run by two competing, weak governments. Armed groups, tribesmen and normal Libyans tend to vent their anger about high inflation and a lack of infrastructure on the NOC, which they see as a cash cow booking billions of dollars in oil and gas revenues annually.