In any ultra-competitive market, and Europe’s airline one is no exception, casting doubt on your rival’s fortunes is a good sport. And Ryanair chief whipper – the Indiana Jones of the airline business – Michael O’Leary took a crack at the survival prospects of German hybrid carrier Air Berlin this weekend.
According to reports, he told a German paper Air Berlin would be one of the victims in this vicious market and that Germany would one day be dominated by Lufthansa and yes, you guessed it, Ryanair.
In some ways Air Berlin is fair game. It has a multi-pronged strategy (low-cost, high(er) service, short-haul leisure, long-haul leisure) that some argue is unfocused and only mildly profitable.
It is a strategy that puzzles other CEOs. When I interviewed easyJet boss Andy Harrison recently he described Air Berlin’s growth strategy as “the Frankenstein theory”.
I ran out of room to put this bit in, but he was contrasting organic growth (broadly the easyJet model excepting Go and GB Airways) with the alternative of hiring investment bankers to go and buy others. With the latter he said what you “end up with is a mixture of different airlines” that really should not be put together – hence the Frankenstein analogy.
Of course, Air Berlin chief Joachim Hunold, as he explained to us last year, sees no contradiction or confusion in his model.
But Air Berlin did struggle last year to integrate one of its new buys – LTU – and only posted a modest profit when its nearest rivals did much better.
I will not be alone looking keenly at its next set of financials (published at the end of May) to see how 2008 is treating the carrier so far.