Ryanair’s Excellent Austrian (and Swiss) Adventure Begins With a Deal For Laudamotion

Niki is an airline that I thought was dead long ago. In fact, it has a tombstone of its own in my Airlines We Lost 2017 post. But after a number of twists and turns, Niki has found an unlikely savior. It’s not really Niki anymore; it’s a vehicle for Ryanair to wreak all kinds of havoc.

Niki was founded by, no surprise, Niki Lauda. Lauda is the former race car driver who founded Lauda Air, an operator which was eventually sold to Austrian Airlines. But he wasn’t done, so he decided to create an airline using the other half of his name. He called it Niki (sometimes flyNiki). Soon after it was born in 2003, Niki ended up cuddling up with what was then styled as Air Berlin. The airlines eventually merged, but Niki remained a separate brand focusing on the Austrian leisure market.

As airberlin’s fortunes faded, the question remained about what to do with Niki. In the last couple of years, all of these things were on the table.

• Etihad was going to buy airberlin’s stake in Niki and then put it into a joint venture with TUI. That failed to materialize.
• When airberlin filed for bankruptcy, Niki wasn’t a part of it. Lufthansa began sniffing around the airline and announced it would buy it and merge it into Eurowings. Once the European competition watchdog signaled it wouldn’t have any of it, the deal fell apart. It was announced Niki was shutting down, and that’s when I wrote my post.
• At the very end of the year, IAG announced it would step in to buy the parts of Niki it desired. It would use those parts to bring its low cost carrier Vueling into Austria (as well as some other spots). But in a strange twist, it was ruled that the governing body that gave IAG the victory in the Niki acquisition had no jurisdiction. It was time to go back to the beginning.

Are you tired of this? Me too. Let’s take a break.

Alright, now where were we? Oh right, IAG’s deal just fell apart thanks to regulatory shenanigans. Niki could have died, but wait…

• IAG tried again to buy up Niki in the right jurisdiction, but a white knight stepped in to save the Vueling-ization of the airline. Niki Lauda himself was back, and he won the right to buy the airline. Having already used his two names but still needing to feed his ego, he decided to use his Lauda Motion bizjet operation to acquire Niki’s remains. The new airline would have no time for spaces. It would be called Laudamotion (and the bizjet stuff was moved out into a new subsidiary).
• You thought this was the end of the story? HAHAHAHAHA. No. Just a few weeks later, Ryanair swooped in to buy a quarter of Laudamotion with plans to buy an additional 50 percent. The saga is done for now.

And this is where things get interesting. Laudamotion is going to focus on flying from Austria, Germany, and Switzerland to leisure destinations primarily in the Mediterranean. It has 15 A320 family aircraft now and it’s going to wet lease six 737s from Ryanair this year so it can do a full summer of flying. According to Ryanair, Laudamotion will have a fleet of 30 airplanes and be profitable by the third year of operation.

So, uh, why?

Well, there are a few reasons why Laudamotion (or LaudaMotion, the press release can’t even decide which is right) is attractive to Ryanair.

First, there’s the easy access into Vienna. Today, Ryanair doesn’t fly to Vienna at all. Wizz is planning a huge build-up this summer to try and take advantage, but it’s going to have a much harder time competing against Ryanair than it would have against Laudamotion alone.

Ryanair also has nothing in Zurich, a city which Laudamotion will serve from several cities.

So the network is largely complementary, and that’s not a bad thing.

But then there’s this quote from Michael O’Leary I noticed in the press release.

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.

Ah, yes, interesting. Ryanair has been all-Boeing for a very long time, and it beats the heck out of the manufacturer to make sure it gets a rock bottom price each time it places an order. While Ryanair threatens to go to Airbus from time to time, that threat hasn’t seemed all that real until now. Sure, this is a small fleet of Airbus aircraft for now, but it can grow. And if Ryanair has any kind of Airbus fleet at all, that makes the threat of an order going the other way even greater.

Heck, that alone might provide enough value to justify the 100 million euros Ryanair is putting into the airline if it knocks a few bucks off the next big aircraft order.

In the end, this is relatively low risk for Ryanair, but it gets to experiment with some new toys (airplanes and airports). I think of it as a sandbox, and it should be a fun one to play in.