Merger Talks between Lufthansa and Turkish Airlines

Seminar paper from the year 2013 in the subject Business economics - Investment and Finance, grade: 1,0, University of Applied Sciences Wildau (Institute of Technology), language: English, abstract: During the last visit of the Turkish Prime minister Recep Tayyip Erdogan in Germany in November 2012 the German chancellor Angela Merkel told him that she would like the two countries to work on a joint management and operations of the two airline giants, Lufthansa (LH) and Turkish Airlines (TK). Erdogan seemed quite flattered about the offer responding later in an interview with the Turkish media (translated quote):"During my visit to Germany, Chancellor Merkel offered to establish joint management for LH and TK. And I have responded positively to Merkel's offer. We have already had plans for joint projects and I hope to take such a joint step together."Since then there have been numerous rumours in the news about a possible merger between LH and TK.The intent of this paper is to discuss what is behind these rumours and analyse the possibility of such a merger. For this purpose we have split the paper in four parts. In the first part we will talk about the present situation of the European aviation business, specifically in the case of LH and TK. We are also going to introduce the two companies and analyse several aspects of them i.e. past development, performance of the last years, current financial situation and company strategy. Additionally we will present the strengths and weaknesses of each company and the challenges they are facing at the moment.In the second part we will analyse what possible benefits could arise from a merger of the two companies and briefly outline some of the challenges the airlines will have to overcome to make a merger successful. In the third part the possible forms of cooperation will be discussed.Finally in the fourth and last part, we will assess the future perspective and the external impact of such a merger. Throughout the paper we