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.


Oil rises after US Navy destroys Iranian drone

Updated 19 July 2019
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Oil rises after US Navy destroys Iranian drone

  • The International Energy Agency is revising its 2019 global oil demand growth forecast to 1.1 million barrels per day
  • Speculators have exited options positions that could have provided exposure to higher prices in the next several years

TOKYO: Oil prices rose more than 1 percent on Friday after the US Navy destroyed an Iranian drone in the Strait of Hormuz, a major chokepoint for global crude flows, again raising tensions in the Middle East.
Brent crude futures were up 82 cents, or 1.3 percent, at $62.75 by 0100 GMT. They closed down 2.7 percent on Thursday, falling for a fourth day.
West Texas Intermediate crude futures firmed 61 cents, or 1.1 percent, at 55.91. They fell 2.6 percent in the previous session.
The United States said on Thursday that a US Navy ship had “destroyed” an Iranian drone in the Strait of Hormuz after the aircraft threatened the vessel, but Iran said it had no information about losing a drone.
The move comes after Britain pledged to defend its shipping interests in the region, while US Central Command chief General Kenneth McKenzie said the United States would work “aggressively” to enable free passage after recent attacks on oil tankers in the Gulf.
Still, the longer-term outlook for oil has grown increasingly bearish.
The International Energy Agency (IEA) is reducing its 2019 oil demand forecast due to a slowing global economy amid a US-China trade spat, its executive director said on Thursday.
The IEA is revising its 2019 global oil demand growth forecast to 1.1 million barrels per day (bpd) and may cut it again if the global economy and especially China shows further weakness, Fatih Birol said.
“China is experiencing its slowest economic growth in the last three decades, so are some of the advanced economies ... if the global economy performs even poorer than we assume, then we may even look at our numbers once again in the next months to come,” Birol told Reuters in an interview.
Last year, the IEA predicted that 2019 oil demand would grow by 1.5 million bpd but had already cut the growth forecast to 1.2 million bpd in June this year.
Speculators have exited options positions that could have provided exposure to higher prices in the next several years, market participants said on Thursday.
US offshore oil and gas production has continued to return to service since Hurricane Barry passed through the Gulf of Mexico last week, triggering platform evacuations and output cuts.
Royal Dutch Shell, a top Gulf producer, said Wednesday it had resumed about 80 percent of its average daily production in the region.