Print Edition - 2018-03-21 | MONEY
Ryanair to buy Niki Lauda airline in a bid to challenge Lufthansa
- To buy 75pc if regulators approve
- Sees Germany as key growth market
Mar 21, 2018-Ryanair has agreed to buy a majority stake in the new Austrian leisure airline founded by former motor racing champion Niki Lauda in a major push on the German and Austrian markets dominated by Lufthansa.
The Irish airline, Europe’s largest low-cost carrier, has agreed to buy an initial 24.9 percent stake in Vienna-based Laudamotion, formed out of insolvent carrier Niki, formerly part of Air Berlin.
That will rise to 75 percent “as soon as possible”, subject to EU regulatory approval, the airlines said in a statement. Ryanair will lease Laudamotion six crewed planes to increase its fleet to 21 planes this summer and to 30 planes within three years. Ryanair currently operates a fleet of 430 Boeing 737s.
Niki, which flies to tourist destinations from Germany and Austria using Airbus A320 planes, was seen as the most attractive part of
insolvent Air Berlin and this deal sees it end up in the hands of Ryanair, after attempts by Lufthansa
and British Airways-parent IAG to secure it.
“This surprise move by Ryanair will be exactly what Lufthansa is not looking for,” aviation consultant John Strickland said.
“Despite the consolidating effect of the majority Air Berlin acquisition (under which Lufthansa bought much of the business, but not Niki) they will face not only growing Ryanair capacity in Germany but now also significant influence in Austria,” he said.
Germany has been slow to open up to low cost airlines, helping to protect home carrier Lufthansa against the march of the likes of easyJet and Ryanair.
Low-cost carriers typically account for about 10-20 percent of traffic at Germany’s airports, while they command an over 50 percent market share in Europe as a whole on short-haul flights.
But after the collapse of Air Berlin, Germany’s second largest airline, the budget players are taking their chance to expand. EasyJet has acquired Air Berlin’s operations at Berlin Tegel airport and has started German domestic routes in competition with Lufthansa.
Ryanair CEO Michael O’Leary had been a fierce critic of Lufthansa’s initial plans to buy much of Air Berlin. After dropping the Niki plans, Lufthansa has ended up with Air Berlin unit LGW, but also took on 77 of the defunct carrier’s fleet of around 140 leased planes.
Lufthansa also recently overtook Ryanair as Europe’s largest airline by passenger numbers and the Laudamotion acquisition could help Ryanair to regain the title.
“This Laudamotion partnership is good news for Austrian and German consumers/visitors who can now look forward to real competition, more choice and lower fares,” O’Leary said in a statement.
Niki Lauda needed partners to help get Laudamotion off the ground and was working with Thomas Cook’s Condor and was also in discussions over leasing crewed planes to Lufthansa’s budget arm Eurowings.
Lauda said on Tuesday the talks with Eurowings continued. Condor CEO Ralf Teckentrup said it planned to start marketing Laudamotion flights this week, as agreed.
The deal gives Laudamotion “unbelievable sales power,” Lauda told journalists onboard a flight from Vienna to Duesseldorf. “I met O’Leary recently and we came to an agreement relatively quickly,” he said.
Published: 21-03-2018 08:29