Ryanair buys 75% of airline owned by Niki Lauda

Strategy is to build LaudaMotion into a successful Austrian low fares airline

Deal opens up the possbility that Ryanair could ultimately do a deal to buy aircraft from Airbus, which supplies LaudaMotion’s planes. Photograph: Reuters

Deal opens up the possbility that Ryanair could ultimately do a deal to buy aircraft from Airbus, which supplies LaudaMotion’s planes. Photograph: Reuters

 

Ryanair is buying 75 per cent of an airline founded by multiple Formula One champion, Niki Lauda, in its first acquisition in 15 years.

The move gives the Irish carrier a foothold in the former Air Berlin business, which Ryanair was eyeing after the German airline was declared insolvent last year.

Ryanair said on Tuesday it will invest €100 million in Austria’s LaudaMotion, which it will help develop as a low-fares airline.

The group will take an initial 24.9 per cent stake in LaudaMotion, but says that will rise “as soon as possible” to 75 per cent, subject to EU competition approval.

Three-time Formula One winner Mr Lauda owns and chairs LaudaMotion, which he founded as Niki Airline in 2003 before selling it to Air Berlin, which was wound up last year.

In January, Mr Lauda bought back Niki’s assets, including several A320 craft, and renamed the business, scuppering a bid for them by Aer Lingus parent, International Airlines’ Group.

EU competition regulators last year blocked Germany’s Lufthansa from buying Niki Airline’s business.

Leisure destinations

LaudaMotion will shortly begin flying scheduled and chartered services from Germany, Austria and Switzerland to mainly Mediterranean leisure destinations. The carrier will compete in a market dominated by Lufthansa and its Swiss and Austrian subsidiaries.

Mr Lauda said he was “thrilled” at the partnership with Ryanair. “I have always stood up for competition and have opposed monopolies,” he said. “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.”

Mr Lauda will chair the airline, while Ryanair will provide financial and management support. The Irish airline will lease six aircraft and crew to LaudaMotion this summer to enable it complete a flying programme.

Ryanair will pay “less than €50 million” for the 75 per cent stake, but will provide an additional €50 million for year one start-up and operating costs.

Airbus aircraft

The strategy is for the airline to reach profitability by year three of operations, provided the plan to grow the business to a fleet of at least 30 Airbus aircraft is successful.

Ryanair chief executive Michael O’Leary said he looks forward to working with Niki Lauda to successfully develop his vision.

“The LaudaMotion Air Operator’s Certificate will support a fleet of Airbus aircraft which is something we have hoped to develop within the Ryanair group for some years,” he said.

Stephen Furlong and Ross Harvey, analysts at Dublin stockbroker, Davy, noted that the deal strengthens Ryanair’s position at Palma Airport, as it includes 50 landing slots used by flights from Dusseldorf in Germany and Vienna in Austria.

Mr Furlong and Mr Harvey also suggest that it opens the possibility that Ryanair could ultimately do a deal to buy aircraft from Airbus, which supplies LaudaMotion’s planes.

Ryanair only flies Boeing craft and is due to begin taking delivery of 200 of the US manufacturer’s 737 Max planes from next year.