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Lufthansa is on a high, following a record 2007 profit †a result it expects to eclipse this year. Now CEO, Wolfgang Mayrhuber, has stated he expects further consolidation among airlines both in Europe and the US and the German carrier is willing and able to play an active role.
But who (or what) would Lufthansa look to acquire? Firstly, it has ruled out a bid for Alitalia (which is one step closer to oblivion following Air France-KLM’s formal withdrawal of its offer) or Spanair.
Lufthansa has been linked to a potential takeover of bmi with Virgin Atlantic, although expanded access to an increasingly competitive (and currently dysfunctional) Heathrow (which is the key attraction of bmi) is unlikely to be highest on Lufthansa’s priority list. The German carrier has also been linked with loss-making all-Business carrier, Silverjet. However, Lufthansa’s successful links with PrivatAir, which is establishing a new all-Business service to Pune in India mid-year, probably rules that out too.
Lufthansa’s most recent high profile investments, JetBlue and SWISS, give some insights into potential future airline acquisitions.
JetBlue offered a way to enter the crucial US market, without the legacy costs attached. The carriers are now exploring “innovative commercial arrangements” designed to benefit both airlines and their customers. Meanwhile, SWISS allowed Lufthansa to consolidate its position close to home on favourable terms.
Even more instructive as per Lufthansa’s future investment focus were comments by Mr Mayrhuber in Oct-05, following the airline’s acquisition of a strategic stake in a national hub airport, Fraport, operator of Frankfurt Airport. He stated, "competition in the industry is no longer between airlines and alliances, but between air traffic systems in their entirety, encompassing airlines, airports and air traffic control... the investment is a good development for the entire air traffic system in Germany".
Lufthansa is likely to participate in the privatisation of air traffic control provider, Deutsche Flugsicherung, when the German Government finally sells its 74.9% share of the company. On the airline investment front, there are unlikely to be many opportunities that satisfy Lufthansa’s objectives. But when the right opportunity presents itself, Lufthansa is ready to pounce.
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Lufthansa to be active in airline consolidation 
