Lufthansa’s Eurowings to Fly From Munich to Meet EasyJet Threat

  • German group says discount arm has a role at its main hubs
  • Low-cost unit could also be a focus for consolidation: Garnadt

Deutsche Lufthansa AG’s Eurowings arm will start flights from Munich next year to combat rivals such as Easyjet Plc, in a strategy switch that will see the discount unit make its first major incursion at one of its parent’s German hubs.

“Low-cost carriers are quite active already,” Karl Ulrich Garnadt, the Lufthansa board member responsible for Eurowings, said Wednesday in Essen. While a launch date for operations from Munich hasn’t been set, services will commence some time in 2017, he said.

Lufthansa has previously excluded Eurowings from Frankfurt and Munich, where short-haul flights performed by its namesake brand help feed lucrative long-haul trips. While an expansion of the discount division at the expense of the main airline could be opposed by unions and has previously led to strikes, Garnadt said the group must respond to competition in the Bavarian city.

While Eurowings will initially offer short-haul flights from Munich, typically requiring four or five jets, long-haul routes aren’t out of the question, he said. Operational issues and a lack of pilots have slowed the roll-out of inter-continental services from Cologne, with flights to Las Vegas delayed until 2017.

Austrian Ambitions

Eurowings already has a base in Vienna, the main hub for Lufthansa’s Austrian arm, and will station its third Airbus Group SE A320 aircraft there later this year. A fourth plane will be located in Salzburg, Garnadt said. The long-haul business in Cologne will get a seventh A330 wide-body in March.

Bookings for September are generally looking “somewhat better” than in August, the executive said, though demand remains volatile.

Garnadt reiterated that Eurowings could be a vehicle for consolidation, saying the industry faces “epochal change” in Europe as discounters led by Ryanair Holdings Plc push into new markets with vast fleets that could leave smaller operators unable to survive alone. Partners don’t need to be German or operate A320s, though they must be cost-competitive, he said.

Lufthansa is looking at taking over planes and routes from ailing rival Air Berlin Plc, people familiar with the plan told Bloomberg in July. Executives at Thomas Cook Group Plc have also said a partnership might be an option for its German holiday airline Condor, while Lufthansa is also looking at buying the 55 percent of Brussels Airlines it doesn’t yet own.

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