Lufthansa CEO to sign Air Berlin deal today

Lufthansa swoops on its broke rival

Germany's biggest airline Lufthansa will buy more than half of the aircraft of its bankrupt competitor Air Berlin, chief executive Carsten Spohr said on Thursday.

Spohr said in Berlin that both airlines will sign the agreement later on Thursday in Berlin.

"We will see a milestone in the history of Lufthansa and Berlin today", he said.

The deal will leave Lufthansa, a traditionally high-cost "flag carrier", in a much better position to compete with the likes of EasyJet and Ireland's Ryanair, which have taken large chunks of its share in short-haul routes within Europe.

Germany's second-largest carrier filed for bankruptcy in August after its main shareholder, Etihad, said it would not give further financial support.

Easyjet is negotiating with Air Berlin to possibly acquire the remaining 20 to 30 aircraft from the carrier, which a year ago ran up a loss of about 782 million euros and has debts totaling almost 1.2 billion euros.

Flights continued after a transitional loan of €150m from the German government.

Analysts at Bernstein Research raised their rating on Lufthansa's shares to "outperform" from "market-perform", saying they expected a deal with Air Berlin to add around 70 to 90 million euros to annual operating profits at Lufthansa's budget unit Eurowings in the medium term. But the pressure was on to reach a deal this week, as Air Berlin's planes will no longer be allowed to fly after October 28 under insolvency rules.

Flights operated by Air Berlin subsidiaries Niki and LG Walter, which are not insolvent, will continue indefinitely, the company said.

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