A European shopping spree? Earlier today, it emerged that Lufthansa is planning to take a 10% stake in Latvian carrier, airBaltic. This is according to a report published by Italian daily, Corriere della Sera. Lufthansa’s interest in airlines across Europe forms part of a wave of consolidation of the airline industry on the continent in recent years.
The Lufthansa Group currently includes carriers like Austrian Airlines, SWISS, Eurowings and Brussels Airlines. The German aviation group is currently finalizing its initial purchase of Italy’s flag carrier, ITA Airways.
airBaltic interest
Corriere’s report cites three anonymous sources in the Baltics that revealed that the Lufthansa Group is looking at an approximately 10% stake. This would be an important development for several reasons:
- Lack of intercontinental routes: airBaltic is a short/medium-haul only airline, with a single fleet of Airbus A220s. It operates primarily from its Riga base in Latvia but has, in fact, expanded from the two other Baltic countries, Estonia and Lithuania, serving as their defacto flag carriers, too.
- Not necessarily a key region: the Baltics have historically not formed part of Lufthansa Group’s key sectors including the transatlantic market.
- Aggressive European expansion: it has already expressed interest in TAP Air Portugal and is finalising its initial commitment for 41% of Italy’s ITA Airways. Air Europa is also an interesting case for Lufthansa.
- No alliance: airBaltic is not in any airline alliance, meaning it does not directly benefit from
Star Alliancemembership as the Lufthansa Group does. Regardless, it can and has struck its own mutually beneficial codeshare agreements.
Photo: Karolis Kavolelis | Shutterstock
Lufthansa’s interest in airBaltic had already emerged in early September, although the amount the German aviation group was planning was not known. A 10% investment differs vastly from a majority stake, which requires a longer legal and political process, as seen during the Lufthansa-ITA acquisition. On the other hand, Air France-KLM had less of an issue acquiring a 20% stake in SAS, which was completed earlier this year.
It is unclear when such a deal could be announced. When contacted by Simple Flying, both airBaltic and Lufthansa refused to comment, noting that they do not engage in rumors and speculation.
A significant wet-lease partner
airBaltic and Lufthansa’s relationship stems since 2019. Lufthansa has described the company as being a “reliable and valuable partner,” announcing the extension of the group’s wet lease agreement with airBaltic three years beyond the summer of 2025.
The wet-lease agreement this coming summer will include up to 21 planes, as well as give in winter. These will be deployed across the group’s European hubs, including Brussels, Frankfurt and Vienna. At the time, airBaltic CEO Martin Gauss said:
“This partnership is an endorsement of our wet lease capabilities and reliability from a well-respected international brand like
Lufthansa Group
. We are looking forward to a successful collaboration over the coming years.”
Photo: Tanya Keisha | Shutterstock
It is worth keeping in mind that this agreement demands significant resources from airBaltic. It has 48 A220s in its fleet, of which 10 are listed as inactive according to ch-aviation data.
From ITA Airways to TAP Air Portugal: European consolidation
Lufthansa is currently involved in its acquisition of ITA Airways. The group hopes to expand its reach beyond its key transatlantic market by growing its operation in markets like South America and Africa. As the group’s southernmost hub, Rome Fiumicino Airport is expected to become an important Lufthansa gateway for these two continents.
Related
European Commission Approves Lufthansa’s Takeover Of ITA Airways
The European Commission has finally approved the ITA-Lufthansa deal following months of investigation.
As it stands, Lufthansa is preparing to submit its list of sacrifices it intends to adopt as per the European Commission’s demands in order to approve the merger. According to Corriere della Sera, these concessions include relinquishing slots at Milan’s valuable and overcrowded Linate Airport, as well as finding (and funding – either directly or indirectly) competitors to compete on routes where Lufthansa would otherwise gain a complete monopoly.
British Airways and Air France reportedly said they would be willing to facilitate Rome-US connections via their respective hubs in exchange for additional slots at Linate, separate from the ones demanded by Brussels. In other words, it’s a win-win where the winning is for everyone but ITA-Lufthansa.
Separate from the ITA deal, European giants are eying two other Mediterranean airlines: TAP Air Portugal and Air Europa. Lufthansa has already shown interest in both carriers, with various media reporting that it has sent a delegation to both Lisbon and Mallorca for discussions.
Photo: Vincenzo Pace | Simple Flying
It seems someone has money to spend.
