Lufthansa sees more consolidation on the horizon in Europe and expects to play a role in it.
Speaking to CNBC at the IATA Conference in Seoul, Lufthansa CEO Carsten Spohr stated;
There is a need and room for more consolidation in Europe. Probably looking at North America somewhat shows how the industry could develop.
Lufthansa already has Austrian Airlines, Brussels Airlines, and SWISS in its portfolio. Spohr added:
We have been active on this for many years. If there are opportunities, we surely will be ready.
But which airlines are realistically ripe for acquisition? Currently, Lufthansa is bidding for Condor, a German airline Lufthansa once owned 50-50 with Thomas Cook. Thomas Cook bought out Lufthansa in 2007, but now Lufthansa sees synergies in merging its Eurowings budget division with Condor to create a larger and more robust route network.
While Lufthansa has put in a bid for Condor, it is no rush to move quickly because it does not fear that is has competition. Speaking on an earnings call last month, Spohr explained:
If somebody would want to do it against us, I think it’s very unlikely because there is more than 30 percent feed on Condor airplanes by Lufthansa short-haul. So I don’t think that anybody could operate that against us out of Frankfurt or Munich, so we are quite relaxed.
I don’t know that I’ve ever seen Lufthansa leadership “quite relaxed”…
But what about struggling Alitalia? Or SAS? Besides a marriage of two budget carriers in Eurowings and Condor are there other viable airlines ripe for consolidation?
Brian Sumers reports that more and more European governments are seeing “renewed importance” in holding onto national airlines. As nations sees national airlines, like Finnair or TAP Portugal…or even Alitalia…as indispensable national resources, any merger or acquisition becomes less likely. For the point of a merger, in most cases, is to increase efficiency and decrease redundancy by removing overlap. Lufthansa has virtually walked away from Alitalia’s table precisely because the Italian government will not truly allow Lufthansa to meaningfully change the airline. And by “meaningfully change” I most certainly mean make cuts.
Although Spohr spoke of wider industry consolidation across Europe into a big-three like in the United States, I don’t see that happening right now. Beyond the potential re-acquistion of Condor, I do no expect further consolidation in Europe this year.