Austrian Airlines: Austerity Program Not Finished

Published: November 2, 2012; 19:21 · (Vindobona)

In the first nine months, AUA´s operating income was positive. However, the restructuring process will go on.

Austrian Airlines: Austerity Program Not Finished / Picture: © Austrian Airlines

The Austrian subsidiary of German Lufthansa has not achieved its restructuring goal yet. What is more, Lufthansa Group faces an enormous pressure from competition. As a result, the airline group´s profit marge decreased steadily in the last quarters. According to CEO Christoph Franz, an operating margin of 3.1% is too low in order to make investments and to secure the long-term existence of the group.

An austerity package with a size of € 1.5bn will improve the profitability, Lufthansa´s management announced. “We still do not have the profitability to make necessary investments.” he said. Further job cuts are not excluded. Moreover, Lufthansa intends to create a discount airline. The main reason for Lufthansa´s weak earning situation is not only the fierce competition, but also the increase of the kerosene price and landing fees. In total, Lufthansa´s costs of the first nine months of 2012 were up by € 9.5bn compared to the reference period of 2011. EBIT reached € 697m (-1.6%). In the third quarter, Lufthansa´s EBIT was up by 18.7% to € 863m.

Franz: „After a difficult restructuring process, AUA has good prospects to succeed.“ According to Franz, AUA has fulfilled Lufthansa´s expectations for the time being. AUA´s CEO Jaan Albrecht underlines that the austerity program will continue. “There is still much to do.” This year, Albrecht wants to reduce costs by € 223m. Since January, 117 pilots and 217 flight attendants left Austrian Airlines. For the first time since 2007, AUA could record operating profits. AUA´s EBIT came at € 5.9m after a negative EBIT of € 31.5m in the reference period.

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