Ryanair to buy 75% stake in Niki Lauda’s new airline, LaudaMotion

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Ryanair to buy 75% stake in Niki Lauda’s new airline, LaudaMotion

By
20 March 2018

By | 20 March 2018

Ryanair has snapped up 24.9 per cent of LaudaMotion, with an aim to buy a further 50 per cent

Ryanair has agreed to buy a 24.9 per cent stake of former Formula 1 champion Niki Lauda’s new low-cost airline, LaudaMotion.

The purchase is considered to be a push by Ryanair to move into the German-speaking markets, which are currently dominated by Lufthansa.

If EU competition regulators allow, the size of Ryanair’s stake will rise to 75 per cent “as soon as possible”.

Europe’s largest low-cost airline will pay less than $61.5m (€50m) for the stake. Ryanair will also provide an additional $61.5m for LaudaMotion’s start up and operating costs in its first year.

Niki Lauda's Formula 1 career saw him become a three-time world champion – Dan74 / Shutterstock Ryanair LaudaMotion Niki Lauda low-cost Group Created with Sketch. Niki Lauda’s Formula 1 career saw him become a three-time world champion – Dan74 / Shutterstock

Ryanair expect the operation to be profitable within three years.

Niki Lauda has a long history with running airlines. He established Lauda Air in 1979 as he retired from Brabham and Formula 1 for the first time. After a return to racing, he took control of the airline again in 1985.

Lauda Air was sold to Austrian Airlines in 1999 and in 2003 he founded Air Niki, which merged with Air Berlin in 2011. LaudaMotion was formed when Lauda acquired Amira Air in 2016.

Following the collapse of Air Berlin and Air Niki last year, Lauda picked up many of the assets, including some of it’s Airbus A320 planes.

Ryanair will wet-lease six of the LaudaMotion Airbuses in the coming summer. The airline operates exclusively with Boeing planes, and it is expected that the use of Airbus planes will give Ryanair leverage in future negotiations.

Lauda has founded three airlines, Lauda Air, Air Niki, and now LaudaMotion – Nufa Qaiesz / Shutterstock Ryanair LaudaMotion Niki Lauda low-cost Group Created with Sketch. Lauda has founded three airlines, Lauda Air, Air Niki, and now LaudaMotion – Nufa Qaiesz / Shutterstock

The German-speaking market has been slow in its pickup of low-cost carriers. Only 10-20 per cent of airline traffic is low-cost, while the average across Europe is 50 per cent.

Air Berlin’s collapse has given the low-cost carriers an opportunity to penetrate.

EasyJet acquired their operation at Berlin Tegel airport, and have since started operating routes in direct competition with Lufthansa.

Lufthansa took Air Berlin’s operations at London Gatwick, along with 77 of their planes.

Ryanair’s move can therefore be see as attempt to park their tanks on Lufthansa’s lawn.

LaudaMotion will start flying from Germany this week, from Switzerland in April, and from Austria in June, Lauda said. 

Ryanair's partnership with LaudaMotion is good for Austrian and German passengers and visitors, Micahel O'Leary said – Northfoto / Shutterstock Ryanair LaudaMotion Niki Lauda low-cost Group Created with Sketch. Ryanair’s partnership with LaudaMotion is good for Austrian and German passengers and visitors, Micahel O’Leary said – Northfoto / Shutterstock

“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,” Michael O’Leary, Ryanair CEO, said.

“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 and 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.”

Niki Lauda said: “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.”