EasyJet PLC (LON:EZJ) revealed on Wednesday that it will go head-to-head with Lufthansa’s airlines in competition for German business customers following its planned takeover of parts of insolvent Air Berlin.
The budget airline in October announced that it had agreed to buy Air Berlin's landing slots and leases for up to 25 A320 aircraft at Berlin Tegel Airport.
READ: EasyJet to benefit from collapse of Monarch and Air Berlin, says Societe Generale and Kepler
EasyJet currently flies from Berlin Schoenefeld airport to destinations outside of Germany.
Its expansion into the larger inner-city Tegel airport will see EasyJet compete with Lufthansa on domestic flights out of Berlin.
EasyJet will start flying four domestic routes to Duesseldorf, Frankfurt, Munich and Stuttgart. It will also fly out of Tegel to 15 international destinations, including Zurich, Vienna, Paris Charles de Gaulle and holiday destinations including Mallorca.
The company will begin these flights from Tegel on January 5 and plans further routes from the airport in the summer season, beginning late March.
“We believe our flight plan from Tegel will be of particular interest to business customers,” easyJet Europe managing director Thomas Haagensen said in a statement.
EasyJet competition may help Lufthansa
However, the competition from easyJet may aid Lufthansa in its quest to win regulatory approval for its proposed acquisition of Air Berlin’s Austrian airline Niki and regional carrier LGW.
As is currently stands, Lufthansa is having to offer concessions to receive the green light from the EU with chief executive Carsten Spohr saying the company will buy Niki virtually without take-off and landing slots if necessary.
Air Berlin filed for insolvency in August after main shareholder Etihad withdrew its financial support but the airline has been able to continue operating with a loan from the German government.
EasyJet’s deal with Air Berlin will cost about £100mln for the current financial year as it will have to lease crewed planes at first for Tegel while it invests in training crews and refitting planes.
EasyJet reports increased demand in November
Separately, EasyJet reported a 8.1% increase in passenger numbers in November to 5.3 million compared to the same month a year ago.
The load factor, which measures the number of passengers against the number of seats available, rose to 92.3% from 89.7% last year.
In the 12 months to November, passenger numbers increased 10.3% year-on-year to 81.3 million and the load factor climbed to 92.9% from 91.3%.
JP Morgan upgrades EasyJet
JP Morgan lifted its rating on EasyJet's stock to 'overweight' from 'underweight' and raised its target price to 1,550p from 1,330p, saying it sees a much improved pricing outlook for fiscal year 2018 and estimated profit contributions from 2019 onward on the back of its purchase of Air Berlin slots.
"The purchase catapults EasyJet to the no.1 position in the combined Berlin Tegel and Schoenefeld market," the broker said.
Shares rose 1.40% to 1,446p in morning trading.