By Bjorn Fehrm
August 30, 2016, ©. Leeham Co: The European leading legacy carriers are all forming LCC arms. First for short-haul and now for long-haul. For Lufthansa, the LCC operations are gradually consolidated under its Eurowings brand.
Eurowings started operations in Germany in 1994, formed from two smaller regional airlines. Its bases were at first Dortmund and Nuremberg. Gradually this changed to Dusseldorf. Lufthansa was a shareholder in the airline since 2001 with 25%, increasing to 49% by 2006. It then also had the right to buy the rest of the shares, with it effectively controlling the airline. By 2011 Eurowings was 100% owned by Lufthansa.
The airline grew over the years and became an important part of Lufthansa regional. Eurowings’ low cost part, Germanwings, was formed into a subsidiary airline in 2002.
In 2008, Lufthansa wanted to merge Eurowings, Germanwings and TUIfly (owned by TUI Travel) into an LCC, to compete with Air Berlin and Ryanair/easyJet. The merger didn’t come about; instead Lufthansa took over Germanwings and developed it as the group’s LCC.
Gradually Lufthansa transferred all European and international flights to Germanwings that did not start from its Frankfurt and Munich hubs. Eurowings, meanwhile, was operated as a regional airline until 2014, when it started to operate flights for Germanwings with its fleet of 23 Bombardier CRJ900s.
Eurowings was developed as a sister LCC to Germanwings during 2015, exchanging the 23 CRJ900s for 23 Airbus A319s and A320s. The regional aircraft and routes were transferred to Lufthansa Regional.
After the Germanwings suicide crash in the French Alps March 2015, Lufthansa transferred all Germanwings flights to the Eurowings brand and closed the Germanwings brand in January 2016.
Eurowings of 2016 was the merger of Eurowings and Germanwings. The company wet-leased routes, aircraft and crews from an ailing Air Berlin from mid-2016, the more modern Air Berlin A320s replacing the older A320 from Germanwings.
Its European network had 80 destinations which were operated with 60 aircraft from hubs at Düsseldorf, Cologne, Berlin, Hamburg and Vienna.
The long-haul operations were based on breaking out a subsidiary of the Lufthansa-Turkish Airline joint venture, SunExpress, as SunExpress Germany. This airline, established in 2011, is now the operator of Eurowings’ leisure oriented long-haul flights.
The original 11 SunExpress Germany Boeing 737-800s have been complemented with six leased Airbus A330-200s to operate flights to the US, South Africa and Mauritius.
Lufthansa bought the remaining 55% of Brussels Airlines on Jan 7, 2017. The airline, the size of Eurowings, is consolidated into Eurowings financials for 1H2017, Figure 1. It will be operationally integrated into Eurowings, now called Eurowings Group, during 2017.
Brussels Airlines adds short and long-haul operations to Eurowings Group. In total, the Eurowings Group now serves 192 destinations in 62 countries from its 11 bases in Europe. North American destinations have grown to 10, with more being added.
The non-long-haul part is the dominant part, with 66% of the ASK (Available Seat Kilometers) and 78% of revenue, Figure 2.
The combined fleet with Brussels Airlines comprise 160 aircraft, of which 144 are A320 series, 10 A330-200s and six A330-300s.
Lufthansa calls its low cost segment the Point-to-Point segment and its legacy airlines Network Carriers, Figure 3. Its target is to be number 1 in its home markets, which for LCC means Germany, Austria, Switzerland and Belgium.
The Eurowings Group will from its Dusseldorf headquarters consolidate all LCC operations of Lufthansa. It integrates the operations of merged airlines first “as is,” with marketing and sales quickly changed to the Eurowings brand.
Then gradually, the operations are integrated and streamlined, to reduce overhead and costs, Figure 4.
Brussels Airlines is the new integration for 2017, following the induction of 33 A320 aircraft from Air Berlin from 2016 and the merger of Eurowings and Germanwings started in 2015.
Lufthansa is in negotiations with Air Berlin’s bankruptcy management to add further parts of Air Berlin to Eurowings, beyond the 33 wet leased aircraft and crews.