Lufthansa Budget Carrier Eurowings to Add More Europe Routes to Capture Summer Travelers

Germany's largest leisure carrier Eurowings has big ambitions to expand its presence across Europe, as discounters scramble to capture market share following the coronavirus pandemic market upheaval.

The Lufthansa Group-subsidiary is expanding its Palma de Mallorca base on the back of strong leisure demand for Mediterranean holidays as Southern Europe slowly reopens. But that is just the beginning Eurowings CEO Jens Bischof said Monday, the airline plans to expand service to Egypt, Greece, Italy, Morocco, Spain, Tenerife and Turkey this summer.

"Eurowings has a pan-European ambition," he said during an Aviation Week webinar. "We want to grow the business in the short- and medium-haul segment.”

This summer, Eurowings will add its first routes to the UK from a point outside of Germany: Mallorca to both Birmingham and Manchester. The airline is also opening a new base at Berlin's Brandenberg airport with an eye on capturing some of the many holidaygoers to the German capital, many of whom fly market leaders EasyJet and Ryanair.

Outside of Germany, Eurowings has four bases: Mallorca; Pristina, Kosovo; Salzburg; and Vienna.

The European ambitions are quite the about face for Eurowings. The airline entered 2019 losing money in the face of increased competition from other discounters. The Lufthansa Group slashed its capacity growth plans to zero that year with an aim to return Eurowings to solid financial footing. Then, the pandemic hit.

The Covid-19 crisis allowed for a needed reset at Eurowings. It closed higher-cost Germanwings operation and streamlined flying on a single operating certificate, ended pricey aircraft wet leases, and slashed overhead costs by 33 percent in 2020. The adjustments came as the Lufthansa Group reported a €6.7 billion ($8.1 billion) net loss for the year.

Those savings coupled with Eurowings leisure-focus in the Lufthansa Group set it up to grow out of the crisis. The carrier plans to fly roughly 80 Airbus A319 and A320 aircraft — it has 102 aircraft — and about 80 percent of 2019 capacity this summer.

“We believe we’re going to see a very strong rebound, especially in tourism travel," said Bischof. "The rebound will be very, very steep.”

Capacity at Eurowings will be about half of 2019 levels during the second quarter, according to Cirium schedule data. Third-quarter capacity will be about 70 percent; however, that is likely to change with many schedules being adjusted up until around 30 days out.

Bischof's optimism gave no hint of concern for the current rise in Covid-19 cases in parts of Europe. In just the past week, France, Greece and Italy have all reported rising infection rates.

"There will be summer demand, but travel will be fraught with obstacles and this will prevent meaningful outperformance," wrote Bernstein analyst Daniel Roeska, citing the rising case counts in a report Monday. He added that European low-cost carriers remain well positioned to take advantage of summer leisure travel.

Rising case counts or not, Bischof said Eurowings continues to see strong bookings. For example, reservations for flights between Munich and Mallorca jumped as much as 700 percent — albeit over a very low base — during certain periods in the past few weeks. This prompted the airline to add additional frequencies in the market.

In addition to Eurowings' European ambitions, Bischof shed some light on the Lufthansa Group's plans for the new long-haul leisure brand Eurowings Discover. The airline will use the Eurowings name to leverage brand familiarity in the German market but is an entirely separate carrier with its own operating certificate. In addition, its operations will focus on Frankfurt and Munich, rather than Eurowings traditional bases in secondary cities.

“The reason for doing this, and reorganizing this, is of course that the hubs have a better feed," said Bischof referring to Lufthansa's main Frankfurt and Munich hubs.