Europe’s most gripping show- down of the year was the battle for the assets of insolvent air- berlin’s Austria-based subsid- iary NIKI. Lufthansa’s bid to buy NIKI was thwarted by Europeancompetitionauthorities. Justasitlookedlike British
Airways parent International Airline Group (IAG) had
clinched the deal, it emerged that the sale process had
to be decided in Austria, not Germany where it was
In a final surprise twist, NIKI founder and Formula
1 champion Niki Lauda reclaimed the Austrian carrier
to create startup LaudaMotion, with Irish LCC Ryanair
unexpectedly announcing plans to take 75%-control of
the new venture.
Labor disputes have also played large across Europe, most notably the Air France pilot pay head-to-head that led to strikes costing the company some
€300 million ($359 million) and to CEO Jean-Marc
Janaillac’s resignation. Te search for his successor
continued into July. “Tere is no apparent plan to
solve the union issue, and the underlying issues of the
company have not been addressed,” New York-based
Bernstein Research noted.
Ryanair, which only started recognizing unions in
December 2017, has also been on the labor rollercoast-er with pilot and cabin crew unions threatening hundreds of flight cancellations in the peak summer season.
Te Air France and Ryanair disputes show that Europe’s
unions remain belligerent in the face of ever-growing
LCC competition and failed airlines airBerlin, Alitalia
Among Europe’s legacies, Lufthansa has been the
star performer. Bernstein said Lufthansa was doing a
good job executing its strategy and delivering substan-
tial earnings increases. “While the airline builds for
the next phase of development, it needs to find a way
to put its increased cash flow potential to work. We
would expect Lufthansa to continue playing an active
role in consolidation in Europe, potentially with Ali-
talia, or possibly even considering a Norwegian deal,”
the analyst said.
Norwegian has been expanding aggressively, but also
posting losses, raising questions about its ability to con-
tinue its pace of growth. In spring 2018, it emerged
that IAG had acquired a 4.61% stake in Norwegian
with a view to a potential takeover. Norwegian’s board,
however, rejected IAG’s two subsequent offers, saying
they undervalued the company and its prospects.
IAG entered the long-haul LCC market directly
with an airline subsidiary names Level, which launched
flights mid-July from Vienna to Palma de Majorca and
London Gatwick. IAG CEO Willie Walsh expects the
airline to be operating to 14 cities by mid-August from
Vienna, which has become a hot-growth airport for air-
lines that include the new LaudaMotion, Wizz Air and
IAG also acquired Monarch’s London Gatwick slot
portfolio for British Airways. While some of these had
to be leased out for summer 2018 under the “use it or
lose it” rule, the group’s overall outlook remains posi-
tive. “IAG still has room to grow. Te company is well
positioned and returning to growth,” Bernstein said.
Meanwhile, Brexit looms large, with the ongoing
political uncertainty in the UK only adding to concern
about rights to, from and through the UK after March
2019 when Britain leaves the European Union. EasyJet,
Ryanair and Wizz have set up new air operator’s certificates as a contingency measure.
In a posting on its website in July, the UK’s CAA
noted, “Te UK government does not want or expect a
scenario in which the UK leaves the EU without a deal.
However, the government has also publicly said that it
has a duty to plan for the unlikely scenario in which no
mutually satisfactory deal can be reached.”
And with airlines needing to make their 2019 sched-
ules this October, the time left to avoid the “unlikely
scenario” looks awfully close.
CHANGE & UNCERTAINTY
Europe has seen a year of change and the final outcomes are still not clear.
BY VICTORIA MOORES