A fleet of aircraft. Credit: © Ryanair DAC.

Ireland-based Ryanair has signed a binding agreement to acquire a majority stake in Austrian airline LaudaMotion.

Under the agreement, Ryanair will initially buy a 24.9% stake in LaudaMotion, and the share is expected to increase to 75% once the deal gets approval from the European Union (EU) Competition authority.

Ryanair will make an investment of less than €50m to buy the 75% stake in LaudaMotion, though it will provide an additional €50m for start-up and operating costs in the first year.

Depending upon the successful implementation of a plan to grow LaudaMotion’s fleet to at least 30 Airbus aircraft, the airline is expected to gain profits three years into its operation.

“This LaudaMotion partnership is good news for Austrian and German consumers / visitors who can now look forward to real competition, more choice, and lower fares.”

The proposed agreement is set to help the development and growth of LaudaMotion.

The company has recently purchased a range of assets from the former Niki Airline, including A320 aircraft. It plans to begin various scheduled and charter services from Germany, Austria and Switzerland primarily to Mediterranean leisure destinations.

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As part of its involvement, Ryanair will provide financial and management support, as well as six aircraft on wet-lease to LaudaMotion, to allow the carrier complete a 21 aircraft flying programme.

Ryanair CEO Michael O’Leary said: “With access to the Ryanair fleet and financial resources, LaudaMotion will now grow more rapidly, as it seeks to compete in a market, which is dominated by Lufthansa’s high airfares with its Swiss and Austrian subsidiaries.

“This LaudaMotion partnership is good news for Austrian and German consumers / visitors who can now look forward to real competition, more choice, and lower fares.”

In addition, the proposed deal expects to provide job security, career opportunities and growth in employment for LaudaMotion, including cockpit and cabin crew, maintenance and administration.