More industry consolidation is on the way says Lufthansa CEO Carsten Spohr. He wants to ensure Lufthansa is in the so-called champions league.
Speaking at a conference in Berlin, Spohr said:
It is obvious that consolidation will act further and we as Lufthansa want to be part of that.
There will most likely be three major European network carriers or groups of carriers, plus one or two low cost guys.
Our job in Lufthansa … is to make sure the company is fit enough to play in this league of global champions league players in our industry
I laughed when I read the last line…leave it to a German CEO to make a football (soccer) reference when it comes to airlines.
But he actually makes a persuasive point. Spohr argues there are three major airlines in the USA, three in the Middle East, and three in China. Thus, he argues Europe will also gravitate toward three major players. And you could even argue that has already occurred, with the Air France Group (Air France + KLM), IAG Group (British Airways + Aer Lingus + Iberia), and Lufthansa Group (Lufthansa, SWISS, Austrian, Brussels). There are independent non-budget players in Europe like Alitalia, SAS, Turkish Airlines, but the three kingdoms…or championship leagues…have already been declared.
Speaking of Alitalia, Spohr says the answer is consolidation via mergers, not bankruptcy. Lufthansa continues to eye Alitalia, hoping to return to the Italian market in a big way after the failed Lufthansa Italia experiment.
But don’t construe Spohr’s argument to signal there will only be three major legacy airlines in Europe. He’s referring to umbrella organizations. Speaking of SWISS, Spohr said people still love the “Swissness” of SWISS and that “here in Europe brands still matter a lot.” Lufthansa bought SWISS 10 years ago, but unlike its plans for Brussels Airlines has no intention of folding SWISS into Lufthansa. Same story with Austrian.
Considering how a big three have already formed in Europe, Spohr’s comments were not exactly revealing. Nevertheless, I liked his choice of language and he makes a valid point. Just like in sport, airline champions and airline losers emerge. Lufthansa hopes it will never be one of those losers.