Air Baltic. Photo: Shutterstock The German Federal Cartel Office, Bundeskartellamt, the national competition authority of Germany, has approved Lufthansa's plans to acquire a minority stake in airBaltic, as first reported by Passport News in January 2025.
As per the agreement signed between the two companies, the Lufthansa Group committed to investing 14 million euros, granting it shares in the company and a seat on the board.
Under the agreement, Lufthansa will acquire 10% convertible shares of airBaltic. After the public offering, the German group is expected to hold at least 5% of the Latvian company's capital.
According to airBaltic's statement, this is regarded as "an additional strengthening of the strategic partnership between the companies".
Andreas Mundt, President of the Competition Authority: "The planned acquisition raises significant competition concerns with respect to several flight routes between German airports and the Baltic states.
On some routes, the involved companies are direct competitors, and there are not many alternative airlines. Nonetheless, we had to approve the merger because overall, the affected routes represent minor markets with very low domestic sales volumes. National merger rules do not permit the authority to intervene in minor markets. Therefore, ultimately, the acquisition had to be approved."
The 10% minority stake includes additional rights for Lufthansa to participate in airBaltic's decision-making process.
Moreover, in 2024, the parties agreed to significantly expand their cooperation in the wet lease sector, whereby Lufthansa leases aircraft together with crew from airBaltic.
The competition authority anticipates that through acquiring minority stakes, Lufthansa will acquire substantial competitive influence over airBaltic. It is expected that after the merger, the interests of its minority shareholder, Lufthansa, will be significantly considered in airBaltic's decisions. However, the companies will remain separate legal entities. Therefore, both airlines are prohibited from making anti-competitive agreements directly and from coordinating prices.
The merger control procedure initially examined individual flight routes based on the European Commission's standard merger control procedure definition. The authority could only examine flight connections affected by the merger project. This concerns many routes between Germany and the Baltic states.
The merger project was subject to German merger control, not to European merger control. Notification to the European Commission would be necessary if Lufthansa intends to acquire control of airBaltic. In Germany, a merger project can be subject to the competition authority if it involves a minority stake.
If Lufthansa increases its holdings in the future, it may ultimately acquire control over airBaltic, which would require a new merger control process, this time by the European Commission.