With Laudamotion coming into existence, it seems to have attracted the interests of Ryanair – who are purchasing 75% of the airline in a deal announced today.
Laudamotion site header
The value of the transaction is worth €50 million. In the first instance, the Ryanair will buy 24.9%, and plans to increase its shareholding subject to EU competition approval. In addition Ryanair will provide another €50 million for “year one start-up and operating costs”
More importantly, the deal also includes a wet-lease of six aircraft to Laudamotion. This will allow the airline to execute is planned flying programme with 21 aircraft. These will join the A320 fleet that formally flew for Niki.
The airline will use these aircraft to operate services from Austria, Germany and Switzerland, and will connect leisure destinations to Greece, Italy and Spain with a mixture of charter and scheduled traffic.
If the planned operation and venture is succesfuly, Ryanair sees LaudaMotion scaling to 30 Airbus Aircraft within three years.
On the purchase, Ryanair’s Michael O’Leary states
“We look forward to working in partnership with Niki Lauda to successfully develop his vision for a successful Austrian low fares airline to service the schedule and charter markets. The LaudaMotion AOC will support a fleet of Airbus aircraft which is something we have hoped to develop within the Ryanair Group for some years.
LaudaMotion will benefit from this partnership between Niki Lauda and Ryanair. With access to the Ryanair fleet and financial resources, LaudaMotion will now grow more rapidly, as it seeks to compete in a market which is dominated by Lufthansa’s high airfares with its Swiss and Austrian subsidiaries.
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. It is also great news for LaudaMotion’s people who can look forward to improved job security and more promotional opportunities in Vienna and other bases as we work with Niki Lauda and his team to accelerate growth of LaudaMotion – Austria’s low fares airline.”
Meanwhile, Niki Lauda, Chairman of LaudaMotion stated
“I have always stood up for competition and have opposed monopolies. Therefore I am thrilled that in the partnership with Ryanair, Laudamotion will be able to establish itself as a strong competitor and to grow quickly and sustainably. A new player in the aviation market is born and I am looking forward to offering our passengers an extensive route portfolio at competitive air fares.”
An interesting play by Ryanair – and something for the Lufthansa group to chew over (as it had trouble holding onto Niki during the fallout of Air Berlin). It seems that Ryanair wants to build a serious competitor to Eurowings and the full fare airlines. By concentrating first on the business it knows – leisure destinations – LaudaMotion should get a steady footing in its new business space.
Of course, there is still the question of what International Airlines Group will do in this space – but competition could finally be hotting in Austria and Germany.
And for Lufthansa group – that could be the real challenge they need to face.
Another note – whilst the wet-leased aircraft haven’t been selected yet, it’s interesting to note that Laudamotion will NOT convert to Boeing 737 operation (which Ryanair operate). By sticking with Airbus with the small company – it will allow the Ryanair holding company to experiment with Airbus aircraft, and gain flexibility in types.
That could have much bigger implications down the line.
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