Business Irish

Monday 24 September 2018

Ryanair and Lufthansa in row over Laudamotion jets

Lufthansa plans to end an agreement to lease planes to Laudamotion, saying the airline has failed to meet payments
Lufthansa plans to end an agreement to lease planes to Laudamotion, saying the airline has failed to meet payments

Maria Sheahan and Ilona Weissenbach

Ryanair and rival airline Lufthansa have clashed over Laudamotion, the Austrian carrier in which Ryanair has just received approval to take a 75pc stake.

Lufthansa, Germany's largest airline, plans to end an agreement to lease planes to Laudamotion, saying the airline has failed to meet payments.

Ryanair denied that the airline had failed to meet lease payments and said Lufthansa had failed to pay Laudamotion for carrying out flights on its behalf in the March-May period.

The row highlights a battle for market share in Germany and Austria after the collapse of Air Berlin and shows how keen airlines are to get planes against the backdrop of recent Airbus delivery delays due to engine issues.

Laudamotion, formed out of the remains of the Niki airline that was part of Air Berlin, flies a fleet of nine Airbus A320s leased from Lufthansa and 10 Boeing 737 jets from new shareholder Ryanair.

"Laudamotion has recently failed - repeatedly - to meet its contractually-agreed lease payment obligations," Lufthansa said in a statement yesterday.

Lufthansa said it needed planes to expand its Eurowings budget carrier and it has therefore exercised a right to terminate the lease agreements.

Ryanair said: "Laudamotion has repeatedly honoured both its aircraft lease payments and maintenance reserves to Lufthansa. Lufthansa's claims of 'repeated failure' to pay is false."

Whether Lufthansa can end the contracts depends on a decision by a court in Britain, with a hearing expected on July 20.

The collapse of Air Berlin, Germany's second-largest airline, led to a fight among carriers Easyjet, IAG and Ryanair to pick up the pieces and gain a foothold in the German and Austrian markets and challenge incumbent Lufthansa.

"The suggested attempts to spike Laudamotion's startup suggests that (Lufthansa) sees the carrier as a threat to its dominant position in the German market, especially on routes to Spain, with a more robust Laudamotion a bigger threat to it in 2019," analysts at Goodbody Stockbrokers wrote in a note circulated yesterday.

Lufthansa had wanted to acquire Niki, plus other parts of Air Berlin, but was forced to abandon its Niki plans for anti-trust reasons.

It was told by the European Commission during the takeover review to make planes available to any new owner of Niki. (Reuters)

Irish Independent

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