Eurowings, Lufthansa’s Low-Cost-Carrier unit, today unveiled a sponsor relationship with Borussia Dortmund of Germany’s Bundesliga.
As part of the relationship, Eurowings will be the official carrier of ‘BVB’ and will transport the team to their matches aboard one of their A320 aircraft that will be painted to honor the team.
Here’s a peek of what the new livery will look like:
Courtesy: Eurowings
Here is the news conference on May 19 announcing the sponsorship details:
Over the past several days, you’ve seen my posts about Lufthansa looking to acquire or ‘tie up’ with a partner in an effort to execute a quantum leap in its Low Cost Carrier unit, Eurowings.
Up til now, Lufthansa has approached the ownership of SAS to discuss the potential of a tie up so that SAS could meld into the Eurowing unit and focus on the LCC business with its world-wide network. SAS ownership, primarily comprised of Sweden, Norway, and Denmark is keen on the idea since the sovereign ownership has been looking to unload their share of SAS back into private hands. The other option, and the one that seems most likely, is Lufthansa’s acquisition of the remaining stake of Brussels Airlines, of which LH already owns 45%. LH has until next year to exercise the option, but it appears as though the decision can be made in the coming weeks.
The newest option is the idea of acquiring Condor from the Thomas Cook Group. Condor, for you avgeeks, was originally founded by a group that included Lufthansa in 1955. LH originally was a 25% stake holder until 1959 when it acquired the entire airline. Lufthansa began selling shares of Condor to Thomas Cook in 2006, and was completely divested of Condor in 2009.
This recent develop has Lufthansa discussing the option of either a tie-up or a complete acquisition of Condor and their 46 aircraft. Predictably, LH and Thomas Cook have both declined comment on the topic.
However, a deal with Condor would not be without its of baggage. Condor is currently saddled with 800 million Euro of debt and reported a loss of over 10 million Euro for their most recent fiscal quarter. Should Lufthansa look to actually acquire Condor outright, it would probably simply take over the debt obligations and pay Thomas Cook next to nothing for the ‘privilege’. Thomas Cook would most likely be content to rid themselves of the liability.
So why is Lufthansa meeting with all of these potential partners?
My theory and opinion, is that Eurowings is not doing as well as expected and their planned growth trajectory has been revised downward. Certain routes launches have been delayed and it appears that the fleet is not growing as quickly as it needs to in order to gain market share. Though LH executives speak optimistically of Eurowings, I can’t help to think that they are doing this because they have to, but have their reservations about the prospects for it. With a tie up or acquisition, it would immediately add a substantial amount of aircraft and expand the Eurowings timetable dramatically, instantly making them a serious competitor for Euro LCC’s such as Ryanair and EasyJet.
What do I think happens?
I think LH is shopping around just to execute a bit of due diligence before it acquires the remaining stake of Brussels that it doesn’t already own. Brussels Airlines is profitable and is already well integrated into the LH Group, so it obviously offers the path of least resistance. What I’m wondering is what will the SN employees have to say should Lufthansa relegate them to the LCC market, offering low fares along with low frills. Brussels is known as a very solid airline because of their outstanding Business Class product on long haul flights and a very strong route network in Europe and Africa. I wonder how that changes should the Eurowings culture moves in.
In an effort to expand Lufthansa’s Eurowings brand, LH has been exploring options with fellow Star Alliance member ‘SAS’. Over the last 6 months, LH has been in discussions with SAS’ ownership (Norway/Denmark/Sweden Governments) to determine if some kind of merger or partnership would be possible to help both airlines accomplish their objectives. It has been no secret that the governments that have stakes in SAS want to get the airline off their books after providing an emergency lifeline to the airline in 2010 to keep it in business.
Lufthansa’s objective to is to take a quantum leap with Eurowings to put them at the top of the Low Cost Carrier (LCC) market in Europe, while SAS is looking to stem the tide of falling market share over the last several years.
From what I gather, the actual acquisition of SAS by Lufthansa is unlikely, as is a minority stake position. However, it seems that both carriers are keen on the idea of expanding their relationship that would allow Eurowings to immediately increase their footprint and give SAS the opportunity to expand their LCC market and move away from ‘Sovereign’ ownership. A partnership seems to offer the path of least resistance.
A major factor that will determine what happens between SAS and LH is what Lufthansa decides to do with Brussels Airlines. LH currently owns 45% of Belgian carrier with an option to buy the remaining stake. A Lufthansa Supervisory Board meeting on April 27 should bring clarity on this. Its widely believed that LH will acquire the remainder of the airline and actually integrate SN into its Eurowings division. LH has until 2017 to exercise the option to complete the purchase but it is likely to be completed this year if the board approves the transaction.
It has been no secret that Lufthansa’s launch of Eurowings long-haul service has met with some turbulence after excessive delays and problems in operating some of their flights. This has caused a bit of backlash among passengers, however LH is taking active steps to work through the growing pains so that these problems go away in the future.
To that end, Karl Ulrich Garnadt, who runs Eurowings has suggested that the start of some planned routes may be deferred into the future. Specifically, he used Las Vegas as an example. Originally, ‘LAS’ was supposed to begin receiving Eurowings flights from Cologne beginning on May 4, 2016. However, according to Garnadt, it appears now that Las Vegas will not see Eurowings flights until sometime in 2017.
When an LH executive ‘suggests’ something, it usually turns into reality, so I have no reason to think that this delay will not happen. His comments went on to suggest that in order to get Eurowings operating properly and meeting passenger expectations, LH has to slow down the expansion in order to perfect the product. The feeling is that things will be back on track next year.
On a positive note, thanks to strong bookings and low fuel prices, Eurowings is achieving their financial objectives. In addition, 2 more A330 aircraft will join the fleet in May and another one will be delivered next year, giving Eurowings a fleet of 7 A330s. That should go a long way to making sure everything runs as smoothly as possible.
Over the past few days, Lufthansa has released several announcements as it relates to their CityLine and Eurowings operations in the USA. Unfortunately most of the announcements dealt with delays in service.
To start things off, Lufthansa has delayed the launch of their CityLine service between Frankfurt and San Jose, California. Flights were to begin on April 29 but have now been delayed until July 1. Plans still call for 5 flights per week.
Eurowings service between Cologne and Las Vegas has also been delayed. Originally set to begin on May 4, service has now been postponed to June 1. Plans still call for 2 flights per week.
Lastly, LH has announced a change to plans concerning Frankfurt – Atlanta being transferred to CityLine. Originally LH was going to transfer the route from their mainline division to CityLine in April, and operate it until June. However the latest update now has CityLine operating the route from March 2 to October 29.
