From sudden opportunity to strategic investment: that sums up the position that Austrian low-cost carrier LaudaMotion has taken within Ryanair, the Irish LCC and the number 2-airline within Europe on passenger volumes.
But what’s the plan behind this? Airinsight briefly caught up with Michael O’Leary, Ryanair’s Group CEO, on the sidelines of the Airlines 4 Europe (A4E) Aviation Summit in Brussels on March 6.
First a little background. LaudaMotion was formed of the remnants of Fly Niki, itself part of the airberlin Group that went bankrupt in October 2017. Fly Niki kept flying until December before it went bust. It had already been bought by International Airlines Group (IAG) until an Austrian court ruled that the take-over procedure should have been done under Austria law and not German law. The result: not IAG/Vueling or Ryanair came out as the preferred buyer, but LaudaMotion, the business aviation company of triple Formula One world champion Niki Lauda, founder of Lauda Air and Niki.
Then, in March 2018, Niki Lauda announced he had sold 24.9% to Ryanair after a quick deal with O’Leary. Based at Vienna but also operating from German and Swiss airports on 65 routes, LaudaMotion would have 21 Airbus A320ceo’s, partly to be leased from Lufthansa/Eurowings. Already in August Ryanair increased its share to 75% and in December 2018 took full ownership of the Austrian LCC. The fleet would grow from the actual 19 operated in Summer 2018 to 25 in Summer 2019 and 30 in 2020 from bases in Vienna, Dusseldorf, Stuttgart, and Palma. Lease agreements for the extra A320s needed next year have already been secured.
More Airbus aircraft needed
Michael O’Leary told Reuters in Brussels that he intends to buy 50 A321neo’s plus 50 options, possibly announcing the purchase at the Paris Air Show in June.
When Airinsight talked to him, O’Leary explained the logic of purchasing LaudaMotion and having an Airbus fleet: “The reason for this (the purchase- RS) is that it came up as an opportunity, plus Lauda is a very strong brand in the Austrian market and to a lesser extent also in the German market and we are very happy to grow it. The other big attraction from the deal is that it is an Airbus operator. We want to within the group have a large Boeing operation with Boeing sims, spares and engineers and somewhere else have Airbus aircraft, sims and things like that. We now have a fleet of Airbus and we will continue to grow it”.
With O’Leary positive that after some recent bankruptcies consolidation within Europe will continue the next years, that’s where the strategy behind buying LaudaMotion might pay-off: “I think more competition divestments will emerge like what happened to the Berlin operations of airberlin. At the time they needed someone to take over who was an Airbus operator that recognized unions. So when it came to if they wanted a deal with easyjet of Ryanair, it was obvious they went for easyjet with its existing Airbus fleet. Hopefully the next time an opportunity comes around, now that we deal with unions and we also have Airbus and Boeings, we would be considered for some of those divestment opportunities.”
O’Leary expects Norwegian to run out of cash by September, with Wizz also growing faster than it can accommodate, but he thinks IAG and Lufthansa will add these airlines to their portfolios. He thinks there could be an opportunity for SAS teaming-up with Ryanair, as its position seems to get weaker in a very competitive Scandinavian market. Having a combined Boeing/Airbus fleet within the Group, at least Ryanair wants to be prepared for anything that comes around.
LaudaMotion will have a fleet of 25 leased Airbus A320s this Summer. (Ryanair)