Following Lufthansa Group’s agreement to sell LSG Group to AURELIUS Group, Stuart Forster puts questions relating to the sale to Erdmann Rauer, Chief Executive Officer and Chairman of the Executive Board at LSG Group.
Stuart Forster (SF): How do you feel about Lufthansa Group’s sale of LSG Group to AURELIUS?
Ermann Rauer (ER): I feel a great relief as the wait is finally over and I am really excited about the sale.
The future looks promising for our company, especially as our future new owner AURELIUS fully supports the execution of our three-pillar strategy and hence our growth. With that, we will be able to stay ahead of the competition in a world of constant change and take the lead in our markets.
SF: Why was AURELIUS selected for the sale?
ER: The AURELIUS Group is a professional and reliable partner. Our shareholder’s (Lufthansa’s) target was to find a good owner for our company who is willing to invest in our strategy and future.
The management of both Lufthansa Group and LSG Group expected the new owner to demonstrate a future-proof business model for the entire LSG Group, a successful track record in complex carve-out transactions, as well as the willingness to support the LSG Group management’s three-pillar-strategy with their expertise and appropriate investments.
AURELIUS ticked most of the boxes in that respect – and it has been the preferred partner for the LSG management as well during the bidding process.
SF: To what extent do you think that the pandemic and its legacy were factors in the sale going ahead?
ER: For sure, the pandemic slowed down the sale process. LSG Group was sold in two parts. First, Lufthansa sold the European business, including Evertaste and SPIRIANT. This deal was signed in Dec 2019 and closed in Dec 2020. The remaining business, meaning LSG Group’s International in all other parts of the world, Retail inMotion, SCIS and the global headquarters, were sold by Lufthansa in a second step – after the closing of the EU deal, when the process restarted.
It was always envisioned by our shareholders to kick-start the sale of the LSG Group’s international business once the European perimeter was closed. This already came in with a delay, while the pandemic had already started. That said, the pandemic showed how resilient the LSG Group is as an organization. We not only managed to cut our costs significantly and restructure our business but also to think ahead into the future and build our three-pillar strategy accordingly.
Explaining the passage about Europe: The LSG Group was sold in two parts. First, Lufthansa sold the European business (including Evertaste and SPIRIANT) with almost all facilities across the continent to Gategroup. This deal was signed in Dec 2019 and closed in Dec 2020. The remaining business, meaning LSG Group’s International in all other parts of the world, Retail inMotion, SCIS and the Global HQs, were sold by Lufthansa in a second step – after the closing of the EU deal, when the process restarted. Hope this is clear?
We also worked closely together with our customers in times when flexibility was enormously important and partnered with key players in our industry and beyond to strengthen our capabilities. Our resilience and strategic plan played a significant role in starting the sale process again in the spring of last year, although the pandemic was not over by then, and in finding an appropriate owner for us.
The future looks promising for our company, especially as our future new owner AURELIUS fully supports the execution of our three-pillar strategy and hence our growth.
Erdmann Rauer, CEO and Chairman of the Executive Board at LSG Group
SF: What is the sale of the LSG Group likely to mean for employees of LSG Sky Chefs, Retail inMotion and SCIS Security Services – both in the short and long terms?
ER: They all have the chance to be part of an exciting project that will pave our company’s way to the future. I am always calling it the ‘new chapter’, which we will now start writing together.
I think we can all look ahead with confidence, as our future new owner wants us to grow and expand our market leadership further. That said, we are also working on making our company an even more attractive employer as we are highlighting the ‘people’ dimension in our sustainability strategy – for example, health and safety and diversity at the workplace are extremely important to us, and we will continue to strengthen these aspects in our activities.
SF: When will the sale be completed and in what ways might the customers and suppliers of LSG Group be impacted ahead of then?
ER: The transaction is expected to close by Q3 2023, subject to relevant external approvals and internal carve-out activities. We expect everything to run smoothly and our day-to-day operations will not be affected.
Our teams are very professional when dealing with the carve-out, plus we also get support from our shareholder Lufthansa and the AURELIUS carve-out team, who are experts in this matter.
SF: What changes might we expect at LSG Sky Chefs, Retail inMotion and SCIS Security Services in the year or so following the sale?
ER: The signing is another step on the LSG Group’s path to becoming a stand-alone company. This will for sure be a big change for all of us, but an exciting one. With AURELIUS, we see a promising opportunity to further develop and grow our entire company and business across the globe.
Our business plan already foresees acquisitions in terms of market consolidation, additional capacity and state-of-the-art technologies. We are also looking into getting back to doing business in Europe, as we have to offer our apparent new owner some prospects. Otherwise, we would not be a global company, right? All of this is of course subject to discussion with AURELIUS once the deal will be closed.
SF: Moving forward, what opportunities does the sale offer the component parts of LSG Group?
ER: LSG Sky Chefs will clearly remain our backbone in classic catering but the company should also flourish in new business segments such as food commerce.
I consider Retail inMotion (RiM) to be our growth engine that brings innovation to our airline customers. In fact, RiM has used the pandemic as an opportunity to reshape its business and expand the solutions that make it unique to maintain its market leader position.
With consistent and high-quality products and services, attractive and customized concept developments, the latest IT technology, as well as pre-order and pre-select solutions in our portfolio, we have the full potential to transform the industry together.
