Budget Airlines

Eurowings Flying High on Merger Rumors

  • Why it matters

    Why it matters

    Consolidation seems inevitable in the over-supplied German low-cost airline markets. Lufthansa subsidiary Eurowings looks like the main long-term winner.

  • Facts

    Facts

    • Lufthansa established Eurowings in 2015 with the aim of making it a serious challenger to low-cost rivals Ryanair and Easyjet.
    • Eurowings has seen substantial growth recently from leasing of part of Air Berlin’s fleet, including aircrews.
    • Germany’s two main tourist airlines, Condor and Tuifly, have operational problems and in the long term could be absorbed by Eurowings.
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german budget airlines eurowings
The merger's arrival may be delayed. Source: Digital Vision/Getty Images

There was no shortage of skeptics in 2015 when Lufthansa CEO Carsten Spohr unveiled plans to move into the budget air travel market. But he insisted that Lufthansa’s Eurowings would become a leading player on the continent – through takeovers, if necessary.

Two years later, Mr. Spohr’s vision is rapidly becoming reality, and Eurowings’ integration of troubled rival Air Berlin seems more and more likely. Industry insiders say a takeover of a vacation airline such as Condor or Tuifly may also be in the cards.

If Eurowings were to acquire Air Berlin’s aircraft via takeover or leasing, it would increase the airline’s fleet to 170, moving it to a higher weight class than Condor and Tuifly, which each have around 40 planes. Eurowings needs to expand to around 300 aircraft if it wants to compete with major budget players Ryanair and Easyjet, which have 392 and 266 planes, respectively. The fastest way to do this is through takeovers or leasing aircraft and crew, as Eurowings has already done with some Air Berlin planes.

“Consolidation of rival airlines onto the Eurowings platform is strategically the right way to go,” Nicoley Baublies told Handelsblatt. Mr. Baublies is head of German flight attendant union UFO and has a seat on Lufthansa’s supervisory board. Ralf Teckentrup, CEO of Condor, has also said he expects considerable consolidation among Germany’s low-cost airlines in the short to medium term.

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