December 14, 2016 / 3:02 PM / 9 months ago

Lufthansa reaches deal for Brussels Airlines

The tail of a Lufthansa plane is seen at Frankfurt airport, Germany, November 23, 2016. REUTERS/Ralph Orlowski

BRUSSELS (Reuters) - Lufthansa (LHAG.DE) has reached a deal to fully take over Brussels Airlines, the Belgian carrier said on Wednesday, part of a drive by the German carrier to grow its budget unit and consolidate the fragmented European airlines industry.

“I can confirm that a deal has been reached,” a spokesperson for Brussels Airlines said, adding further details would be given at a news conference on Thursday morning.

Lufthansa bought 45 percent of Brussels Airlines from owner SN Airholding in 2009 for 65 million euros ($73 million), with an option to acquire the rest from 2011.

Its decision, taken in September, to acquire the rest via a call option forms part of the expansion of its budget Eurowings division, the carrier’s response to competition from Ryanair (RYA.I) and easyJet (EZJ.L).

A source has previously said that because Lufthansa has loaned 45 million euros to Brussels Airlines, the German carrier can buy the remaining stake for as little as 2.6 million euros.

The deal for Brussels Airlines, plus a plan to lease 35 planes and crew from struggling Air Berlin will see Eurowings grow to over 160 planes from a current 90 aircraft by the end of next year.

Lufthansa management has praised restructuring efforts at Brussels that have brought its costs down to among the lowest in the Lufthansa Group. Brussels Airlines is also strong on routes to Africa, where Lufthansa has gaps in its network.

Brussels Airlines served a record 7.5 million passengers in 2015 and made a record net profit of 41.3 million euros, although that is expected to fall this year after the Brussels airport attack in March.

Reporting by Robert-Jan Bartunek; Additional reporting by Victoria Bryan in Berlin; editing by Philip Blenkinsop and Maria Sheahan

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