Interview: LaudaMotion CEO returns to airline race track

April 19, 2018

Formula 1 racing triple world champion Niki Lauda has been involved in the airline business since 1979. Early in 2018, he arranged a deal to buy back the Austrian airline he founded, NIKI, which had become an airberlin subsidiary but went insolvent after airberlin ceased operating. Re-branded LaudaMotion, the new airline has brought in Irish LCC Ryanair as a strategic investor and partner.

Three years ago, you said you were no longer interested in being in the airline industry. What changed your mind? I have often changed my mind. Buying NIKI was a challenge that I wanted to accept. And the more complicated it becomes, the more I enjoy the challenge.

What was it like to negotiate with Ryanair´s Michael O’Leary? Within 14 days of doing the contract to acquire NIKI, I contacted Michael and we quickly did a deal. It was all very easy, because we speak the same language—the language of common sense—and we therefore had no problems at all. There is a clear differentiation between the two brands. LaudaMotion is a different product. Ryanair operates an all-[Boeing] 737 fleet, but it was [O’Leary’s] decision to try out Airbus [A320s] via LaudaMotion. Furthermore, I realize the budget airline scenario in Vienna continues to change. There is Eurowings, easyJet and many others. So it was important to have a cost concept that can compete with those.

Ryanair paid €50 million ($62 million) for up to a 75% share of LaudaMotion, along with a €50 million investment for the first year. That sounds like a good deal for LaudaMotion? I need a critical size, and I need to be able to grow LaudaMotion quickly. [Hungarian LCC] Wizz Air has come to Vienna; [Spanish LCC] Vueling is planning a base here. I have to be able to compete against them. That was always my plan, and the deal with Ryanair is a winner. Ryanair was the first airline to offer help to get the aircraft I need. Ryanair will fly from Berlin with six aircraft. We can grow by 30 or even 40 aircraft in two years. So with Ryanair, I get the turbo charge that I need to create a successful budget airline in Austria.

How much did you pay for NIKI? The purchase price was just under €50 million. But we realized from the first day that there would be losses in the first year. You start to see returns as soon as you start to fly, but you don’t get your investment back in that year. But the carrier should become profitable in 2019.

What’s the first-year operational plan? All flight schedules for the summer season are done. Through the end of May, eight A320/321s will operate for Eurowings. From June 1, LaudaMotion will have its own operations in Germany, Switzerland and Vienna. The most urgent task is to inspire employees and motivate them to become part of the LaudaMotion spirit. LaudaMotion must come back to Vienna. Every additional aircraft we get will be based in Vienna.

Bookings are going very well; there seems to be a travel boom with no end in sight.

NIKI had important assets, such as slots at airports like Dusseldorf and Palma de Mallorca, that made it attractive to easyJet, IAG, Lufthansa and others. How will you use them? NIKI had 60,000 slots for 36 aircraft. But we only need 40,000 slots because I do not need slots from Linz to Vienna or similar. That’s the sort of nonsense that leads to bankruptcy, as happened under airberlin. So we returned 20,000 slots, which ensures the slot coordinators see we are being fair.

Europe already has seen the LCC “revolution” and there is a lot of competition in the region. Can LaudaMotion really offer something competitive? The re-launch of LaudaMotion will come in October, then, hopefully, you will see something better emerging as we move forward with the business. We will implement the “Lauda way to fly” concept, which will be important to differentiating ourselves leveraging Austrian charm and friendliness.

We are also developing a new identity and have hired Do & Do Catering expert Attila Dogudan to assist us with our service products. It should be in place by the time we have set our 2018/2019 winter season timetable.

You are also cooperating with German leisure carrier Condor. How is that going? We cooperate with the German leisure carrier and operate according to their product standards. That includes flight plans, maintenance, crew dispatch or just the ability to refuel the aircraft at an airport; everything that is necessary for flight operations. Our first flights for Condor have taken place.

Are you likely to order Airbus A320neos? That would be logical: the plane operates 15% cheaper [than the A320ceo]. But we need to wait until Pratt & Whitney gets the aircraft’s [geared turbofan] engine problems under control. Even then, they have a lot to do because neo deliveries are now running pretty late. So maybe we will look at whether we can get an airplane in two or three years’ time.

Our older aircraft have lease contracts through three years while our younger aircraft have five years. So that’s the timeframe to start replacing them.

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Interview: LaudaMotion CEO returns to airline race track

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