The Lufthansa airline group has announced its intention to sell part or all of its catering division LSG Group. Lufthansa wants it to be bought by another player in the sector, leading to a merger and economies of scale in this competitive market. The offers of the Swiss Gategroup and the Austrian Do&Co are particularly anticipated.
LSG Group is currently the market leader in Europe, with 75% of its business carried out for airlines and railways outside the Lufthansa Group. It employs 35,500 people and has a turnover of €3.2 billion. Pre-tax profits increased by 39 % to 181 million euros last year.
Lufthansa CEO, Carsten Spohr, said he did not want to conclude an agreement with an equity fund but exclusively with industry players in order to lead to a merger and future economies of scale. He explained for Reuters that the catering industry faces issues related to the large number of sites served, high staff costs and exposure to exchange rates.
Lufthansa has provided data to companies that may be interested so that they can make their offers by mid-April. The Swiss Gategroup (owned by the Chinese conglomerate HNA) and the Austrian Do&Co are particularly prominent. However, the first one suffers from the financial situation of its owner HNA, that is highly indebted after many investments in recent years including the accommodation sector.