Laudamotion: Ryanair's new weapon against Lufthansa and Eurowings

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For the first time Ryanair's traffic figures for Aug-2018 included Laudamotion, the airline founded by Austria's ex-Formula 1 world champion Niki Lauda. The Austrian airline carried 0.5 million passengers in the month, compared with 13.3 million for Ryanair, and although it may be small, its 92% load factor suggests that it is tapping into firm demand in its markets (although it is still short of Ryanair's 97% load factor in Aug-2018).

Laudamotion only launched operations in May-2018 and, based on OAG data for the week of 10-Sep-2018, is only Europe's 56th largest airline by seats. Moreover, the loss-making start-up is not expected to break even for three years. Yet Ryanair, Europe's largest airline, has raised its initial 25% stake in Laudamotion to a controlling 75% after receiving regulatory approval to do so.

On a Europe-wide scale, the transaction makes virtually no difference to market concentration. Nevertheless, as it is a very rare example of acquisition by Ryanair (the last one being its purchase of Buzz from KLM in 2003), it is interesting to consider what Laudamotion brings to the Irish LCC. The Lufthansa Group would seem to be the competitor most clearly targeted by Ryanair with its newest weapon.

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