Air Berlin has bought German airline DBA to expand its route network as it battles fierce competition in the region's crowded air travel market.
News of the deal sent shares in Air Berlin, Europe's third-biggest budget carrier, climbing as much as 13 per cent today.
Air Berlin also reiterated that it expected to post a clear 2006 profit after it posted a profit in the second quarter. It said the purchase of DBA would not weigh on earnings.
Air Berlin said it paid a mid-double-digit million-euro sum for the former German unit of British Airways - three years after the UK carrier offloaded the business for a euro.
DBA serves primarily German domestic routes, while Air Berlin is mostly focused on routes from German airports to destinations around the Mediterranean, with a large dependence on its hub at Palma de Mallorca.
Together the airlines will have annual traffic of around 20 million passengers, though this is still far below larger rivals Ryanair, which carried 37.6 million passengers in the 12 months through July, and Easyjet, with 32.4 million.
DBA will continue to operate as an independent company, but it will be marketed as Air Berlin. A joint summer schedule will come in from April 1st next year, Air Berlin said.