Jan 2, 2018

IAG’s Niki deal still leaves low-cost rivals on front foot

Why might British Airways owner IAG and Lufthansa have been vying to buy the low-cost Austrian airline Niki, founded by former racing driver Niki Lauda? And why might the market have deemed IAG's success such a coup: pushing its share price up 2.7 per cent on Tuesday, and Lufthansa's down 1.4 per cent? A few months later, Lufthansa agreed to buy half of Air Berlin's assets - including Niki, German subsidiary LGW and 20 aircraft - for €210m. Lufthansa's deal hit the skids when rivals including Thomas Cook's Condor noted that it would give the combined group an 82 per cent market share in Germany alone. When EU regulators twice deemed Lufthansa's remedies insufficient, the German group gave up on buying Niki to get the LGW deal through. Lufthansa had been seeking to buy Niki, including 800 staff and up to 15 aircraft, plus LGW, including 870 staff and 33 aircraft, for €210m. IAG is paying only €20m, plus a €16.5m liquidity injection, for Niki and those aircraft. Perhaps the most obvious reason for the market reaction is that IAG's low-cost arm Vueling, which will operate Niki flights through a new subsidiary, starts the year with the European expansion it promised at last year's capital markets day.

Read the full story

 Related companies

Make a complaint about Ryanair by viewing their customer service contacts.