LUFTHANSA is already Europe's largest group of airlines, counting the flag-carriers of Germany, Switzerland and Austria among its portfolio of subsidiaries. It may be about to get even bigger. Impressed with the results of consolidation in North America—now the world’s most profitable aviation market—Lufthansa’s chief executive, Carsten Spohr, is shopping for more airlines. Efforts to lift the group’s shareholding in Brussels Airlines to 100% were disrupted by terrorist attacks in its home city in March, but remain on-track. Scandinavian Airlines (SAS), the shared flag-carrier of Norway, Sweden and Denmark, and Condor, the German leisure carrier, are also now rumoured to be in its sights.
As well as increasing the number of hubs operated by the sprawling organisation, the acquisitions would help Lufthansa scale up Eurowings, its newly relaunched low-cost carrier. Eurowings is Mr Spohr’s answer to Ryanair, EasyJet, Norwegian Air Shuttle and the other low-cost carriers that have come to dominate the short-haul market in Europe. Unlike Germanwings—its smaller and domestically focused predecessor—Lufthansa’s executives hope to ramp up Eurowings’s economies of scale to make it more competitive. The subsidiary is also dipping its toes into the risky low-cost, long-haul market. It currently operates out of three German cities (Cologne, Dusseldorf and Hamburg) plus Vienna, Austria’s capital. A “migration concept” being negotiated with Brussels Airlines would involve partially re-branding the Belgian flag-carrier as a Eurowings franchise. If SAS follows suit then Eurowings bases could spring up across Scandinavia, stemming the rise of Norwegian. If Eurowings subsumes Condor—itself a former subsidiary of Lufthansa—the fleet could balloon overnight.