lowfaresbuster
24th Nov 2003, 21:16
Lauda takes off - again
From the Sunday Telegraph (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2003/11/23/cclauda23.xml&sSheet=/money/2003/11/23/ixcoms.html)
Lauda takes off - again
(Filed: 23/11/2003)
The racing champ's former airline ventures were not untroubled. Now he's about to enter the no-frills market, he tells Michael Leidig
Anyone who recalls how the three-times Formula One world champion Niki Lauda recovered from appalling injuries in 1976 to race again within six weeks can have little doubt he knows how to make a comeback.
Lauda's courage paid off when he won the world championship a year later. He then retired, only to return again and win another world championship in 1984.
However, his rehabilitation skills are not confined to the track but also encompass business. That was demonstrated earlier this month when Lauda announced that he was planning his third foray into the airline business with the purchase of the Austrian subsidiary of Aero Lloyd, a bankrupt German carrier.
Lauda is coy about how much he paid, but will have to invest about £3m in the airline to keep it going.
His first aviation venture was in 1979 when he founded Lauda Air as a small charter company. It was not a great success. However, two years after a relaunch in 1984 it was offering scheduled flights, and it floated in 1990.
But the Lauda Air success story almost ended in 1991 when one of its aircraft, a Boeing 767, crashed on the way from Thailand to Vienna with the loss of 223 lives.
As with Lauda's Formula One crash, he refused to let the tragedy overwhelm him. He immediately flew from Austria to the crash site where, after sifting through the undergrowth, he discovered mechanical evidence suggesting that a fault with one of the engines had sent it into reverse.
He went straight to Britain to test the theory in a 767 simulator. And at a press conference, he announced with typical Lauda decisiveness that he knew the cause of the crash: it was not Lauda Air's fault, he said, but rather a problem with Boeing aircraft. The official investigation reached the same conclusion a year or so later.
The next chapter in the Lauda Air story came when he teamed up with Lufthansa in 1993 and, in 1996, started co-operating with Austrian Airlines (AUA). By 1997, AUA held 36 per cent of Lauda Air.
In 2000 Lauda fell out with AUA over the direction of the airline. He resigned, and AUA took over his remaining shares in 2001.
So what now for the 54-year-old who won't stay down? He says: "I believe in living a life that involves a lot of risk. If you don't take risks, you can't ever expect it to be a success. It would all be far too boring.
"But I don't leap in without preparing. That's not how you win races. But you need to be physically and mentally fit to be a winner on the track, and it's the same in business.
"I take my time to prepare the ground and then I go for it. That's because you might have a great idea, but if you choose the wrong moment economically to launch it, it will still be a failure. Of course, you do also have to be prepared to take advantage of lucky breaks, but with preparation you can give luck the best chance."
Able to carry out interviews in flawless Italian or English as well as his native German, Lauda tells me why he leapt at the chance to take a majority holding in the Aero Lloyd subsidiary.
The move surprised some in the industry who thought Lauda would be unlikely to return to the airline business. Lauda concedes that he made mistakes in the past but says the experience will ensure him success in his new venture.
"I'd been thinking since the start of the year about getting involved in a budget airline," he says. "Just as I finished my preparation work, I had a call from German liquidators who asked me if I was interested in taking over the Austrian branch of Aero Lloyd.
"The offer came at the right moment and I had no hesitation in saying yes. The whole low-cost concept is very interesting, the idea of producing flying hours cheaper than the others. I believe it's the right moment for this move for me.
"I have learned the disadvantages of not keeping control of my airline. I was in partnership with Lufthansa, who decided to consolidate their business and sold their share to AUA. This seemed a good idea at the time because there were a lot of synergies and I'd also hoped that the dynamism of my team would affect the AUA staff.
"But what happened was the opposite. Suddenly AUA, who had until then been the enemy, were no longer the enemy, and that affected morale.
"Lauda Air had always been fast and quick. But instead of speeding up AUA, we slowed down to AUA's pace. What I realise now is that what on paper may look good often doesn't work when it comes to the human factor. It's people that drive a company.
"I tried and failed to put it right, and so I resigned. In the future I won't be looking for mergers - it will be my way or no way."
Lauda's new approach appears to be yielding results in another venture he started last month. He invested in a fleet of Smart cars, renting them out for the bargain price of less than £1 a day.
He makes a profit by charging companies between £630 and £780 a month for advertising on the cars. He says the company, called LaudaMotion, is doing well and advertising has been booked out for three months ahead. Lauda plans to launch LaudaMotion in London at the start of next year.
He is equally optimistic about his new airline. "If everything works according to plan, we will be operating profitably within the first year. I want to create a cost structure that is 30 per cent below Ryanair and easyJet," he says.
"We have to calculate with an income of about €70 to €75 [£50 to £53] per seat for a one-hour flight, otherwise it doesn't pay off. If we can't secure that, we don't even need to start."
He also plans to offer other services. "Cheap tickets alone don't attract passengers," he says. "You'll be a winner if you offer a good price and a product with something extra. I plan to be finished with my concept by the middle of next year."
How his airline will fare is yet to be seen. In a fiercely competitive market, Lauda will need all the determination and skill that he used to display behind the wheel of the fastest cars on earth if he is to succeed.
"Racing taught me not to hold back if you want to be a winner," he says. "That's why I have had so many ups and downs. But if nothing else, I can at least say it's never been dull."
From the Sunday Telegraph (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2003/11/23/cclauda23.xml&sSheet=/money/2003/11/23/ixcoms.html)
Lauda takes off - again
(Filed: 23/11/2003)
The racing champ's former airline ventures were not untroubled. Now he's about to enter the no-frills market, he tells Michael Leidig
Anyone who recalls how the three-times Formula One world champion Niki Lauda recovered from appalling injuries in 1976 to race again within six weeks can have little doubt he knows how to make a comeback.
Lauda's courage paid off when he won the world championship a year later. He then retired, only to return again and win another world championship in 1984.
However, his rehabilitation skills are not confined to the track but also encompass business. That was demonstrated earlier this month when Lauda announced that he was planning his third foray into the airline business with the purchase of the Austrian subsidiary of Aero Lloyd, a bankrupt German carrier.
Lauda is coy about how much he paid, but will have to invest about £3m in the airline to keep it going.
His first aviation venture was in 1979 when he founded Lauda Air as a small charter company. It was not a great success. However, two years after a relaunch in 1984 it was offering scheduled flights, and it floated in 1990.
But the Lauda Air success story almost ended in 1991 when one of its aircraft, a Boeing 767, crashed on the way from Thailand to Vienna with the loss of 223 lives.
As with Lauda's Formula One crash, he refused to let the tragedy overwhelm him. He immediately flew from Austria to the crash site where, after sifting through the undergrowth, he discovered mechanical evidence suggesting that a fault with one of the engines had sent it into reverse.
He went straight to Britain to test the theory in a 767 simulator. And at a press conference, he announced with typical Lauda decisiveness that he knew the cause of the crash: it was not Lauda Air's fault, he said, but rather a problem with Boeing aircraft. The official investigation reached the same conclusion a year or so later.
The next chapter in the Lauda Air story came when he teamed up with Lufthansa in 1993 and, in 1996, started co-operating with Austrian Airlines (AUA). By 1997, AUA held 36 per cent of Lauda Air.
In 2000 Lauda fell out with AUA over the direction of the airline. He resigned, and AUA took over his remaining shares in 2001.
So what now for the 54-year-old who won't stay down? He says: "I believe in living a life that involves a lot of risk. If you don't take risks, you can't ever expect it to be a success. It would all be far too boring.
"But I don't leap in without preparing. That's not how you win races. But you need to be physically and mentally fit to be a winner on the track, and it's the same in business.
"I take my time to prepare the ground and then I go for it. That's because you might have a great idea, but if you choose the wrong moment economically to launch it, it will still be a failure. Of course, you do also have to be prepared to take advantage of lucky breaks, but with preparation you can give luck the best chance."
Able to carry out interviews in flawless Italian or English as well as his native German, Lauda tells me why he leapt at the chance to take a majority holding in the Aero Lloyd subsidiary.
The move surprised some in the industry who thought Lauda would be unlikely to return to the airline business. Lauda concedes that he made mistakes in the past but says the experience will ensure him success in his new venture.
"I'd been thinking since the start of the year about getting involved in a budget airline," he says. "Just as I finished my preparation work, I had a call from German liquidators who asked me if I was interested in taking over the Austrian branch of Aero Lloyd.
"The offer came at the right moment and I had no hesitation in saying yes. The whole low-cost concept is very interesting, the idea of producing flying hours cheaper than the others. I believe it's the right moment for this move for me.
"I have learned the disadvantages of not keeping control of my airline. I was in partnership with Lufthansa, who decided to consolidate their business and sold their share to AUA. This seemed a good idea at the time because there were a lot of synergies and I'd also hoped that the dynamism of my team would affect the AUA staff.
"But what happened was the opposite. Suddenly AUA, who had until then been the enemy, were no longer the enemy, and that affected morale.
"Lauda Air had always been fast and quick. But instead of speeding up AUA, we slowed down to AUA's pace. What I realise now is that what on paper may look good often doesn't work when it comes to the human factor. It's people that drive a company.
"I tried and failed to put it right, and so I resigned. In the future I won't be looking for mergers - it will be my way or no way."
Lauda's new approach appears to be yielding results in another venture he started last month. He invested in a fleet of Smart cars, renting them out for the bargain price of less than £1 a day.
He makes a profit by charging companies between £630 and £780 a month for advertising on the cars. He says the company, called LaudaMotion, is doing well and advertising has been booked out for three months ahead. Lauda plans to launch LaudaMotion in London at the start of next year.
He is equally optimistic about his new airline. "If everything works according to plan, we will be operating profitably within the first year. I want to create a cost structure that is 30 per cent below Ryanair and easyJet," he says.
"We have to calculate with an income of about €70 to €75 [£50 to £53] per seat for a one-hour flight, otherwise it doesn't pay off. If we can't secure that, we don't even need to start."
He also plans to offer other services. "Cheap tickets alone don't attract passengers," he says. "You'll be a winner if you offer a good price and a product with something extra. I plan to be finished with my concept by the middle of next year."
How his airline will fare is yet to be seen. In a fiercely competitive market, Lauda will need all the determination and skill that he used to display behind the wheel of the fastest cars on earth if he is to succeed.
"Racing taught me not to hold back if you want to be a winner," he says. "That's why I have had so many ups and downs. But if nothing else, I can at least say it's never been dull."