Austrian Airlines CEO: "The crisis does not allow for a sigh of relief"
A report shows that Austrian Airlines, like the airline industry as a whole, is still suffering greatly from the COVID-19 pandemic. CEO Alexis von Hoensbroech acknowledges that 2021 has been better than 2020 so far, but the airline is still a long way from reaching pre-pandemic numbers.
"The increasing number of bookings in summer gives us some breathing space, but the crisis does not allow us to breathe a sigh of relief." - Austrian Airlines CEO Alexis von Hoensbroech / Picture: © Wikimedia Commons / Austrian Airlines from Austria [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)]
The airline industry has been hit particularly hard by the COVID-19 pandemic.Travel restrictions combined with fears of travel caused a massive decrease in tourism and air travel in general. The International Civil Aviation Organization estimates that there was approximately a 371 billion dollar loss of gross passenger operating revenues of airlines in 2020.
Austrian Airlines was not immune to this crisis and suffered significant losses in 2020. According to a report, 2021 has been better than 2020 for the airline, but it is still suffering due to the ongoing pandemic.
Report results
The COVID-19 pandemic continues to have a severe effect on Austrian Airlines' corporate results. At the end of the second quarter of 2021, the airline was only able to offer around 55 percent of its pre-crisis capacity and therefore generated adjusted earnings before interest and taxes (adjusted EBIT) of -95 million euros. Adjusted EBIT for the first half of the year was -201 million euros compared to -235 million euros in the same period of the previous year (+ 14%). Compared to the first half of 2020, when the pandemic was in its early stages, the number of passengers fell by 44 percent to just under 1.1 million–compared with 2019 this accounts for a decrease of 83 percent.
“Virus variants, the travel restrictions often associated with them, and low demand for long-distance and business travel are clearly slowing down the recovery of the aviation industry. The increasing number of bookings in summer gives us some breathing space, but the crisis does not allow us to breathe a sigh of relief,” says Austrian Airlines CEO Alexis von Hoensbroech regarding the company figures for the first half of 2021.
Detailed results
In the second quarter of 2021, Austrian Airlines' revenue was 126 million euros, 260 percent higher than in the same quarter of the previous year, which was limited to practically only two weeks of minimal operation in June (Q2 2020: 35 million euros). Compared to the second quarter of 2019, however, the decline in revenue was 79 percent. At 136 million euros, the total operating revenue was 131 percent higher compared to the previous year (Q2 2020: 59 million euros, Q2 2019: 616 million euros). The increase of flight operations at the beginning of summer led to total expenses of 231 million euros, 46 percent higher than in the same quarter of the previous year (Q2 2020: 158 million euros, Q2 2019: 571 million euros). In the second quarter of the year, the adjusted EBIT was EUR -95 million (Q2 2020: EUR -99 million, Q2 2019: EUR 46 million).
In the first half of 2021, the total revenue fell by 45 percent to 201 million euros (1st half of 2020: 363 million euros) or by 80 percent compared to the first half of 2019. Operating expenses in the same period were reduced by 33 percent to 402 million euros (1st half of 2020: 598 million euros, 1st half of 2019: 1,073 million euros). The adjusted EBIT in the first half of the 2021 financial year was -201 million euros and thus 14 percent higher than that of the first half of 2020 (-235 million euros) but 279 percent lower than in the first half of 2019 (- 53 million euros). Comparatively, the number of employees at Austrian Airlines decreased by 9 percent to 6,132 employees (1st half of 2020: 6,756, 1st half of 2019: 6,999). To successfully rebound from the crisis, the company has to be around 20 percent smaller. This is one of the reasons why a total of 1,350 full-time positions have to be cut compared to the pre-crisis level. Around 850 of these cuts have already been made through natural turnover.
The low occupancy of flights in the first quarter of 2021 can be seen in the number of passengers. Due to strict travel restrictions and a low number of flights at the beginning of the year, the number of passengers fell in the first half of the year by 44 percent to 1.1 million (1st half of 2020: 2.0 million, 1st half of 2019: 6.7 million). The available seat kilometers amounted to 2.9 billion and were thus 37 percent below those of the same period of the previous year (1st half of 2020: 4.6 billion, 1st half of 2019: 13.6 billion). The airline's flights were booked at a capacity of 53.1 percent in the first half of 2021 (first half of 2020: 68.1 percent, first half of 2019: 78.1 percent). Its fleet was reduced to 73 aircraft in comparison to mid-2020 (first half of 2020: 85). A large portion of the phased-out planes was due to the retirement of the Dash aircraft from the Austrian Airlines fleet.
Return to diverse destination network and stable liquidity situation
Austrian Airlines has steadily increased the number of destinations in the summer flight schedule of 2021 to include over 100 destinations to help meet the increased demand in the tourist segment on short and medium-haul routes. Increasing incoming bookings towards the end of the first half of the year, the subsidies for short-time working and the effective modernization measures ensure a stable liquidity situation that keeps the company on course. “Unfortunately, there is still no end to the pandemic in sight. However, our high adaptability and the consistent implementation of restructuring measures show that it is possible to successfully get the company through the crisis,” comments Austrian Airlines CEO Alexis von Hoensbroech. The ruling of the European General Court (EGC) announced on 14 June was also very helpful for Austrian Airlines. The EGC dismissed the lawsuit by Ryanair and Laudamotion against the state aid for Austrian Airlines. The court ruled that the aid of 150 million euros from the Republic of Austria did not violate EU law.
Outlook for 2021
Despite the recent increase in demand, the comparison with the pre-crisis year of 2019 shows that the company remains in a difficult situation. The unpredictability of the future of the pandemic also makes it difficult to forecast the return of business and long-distance travel. However, many expect that the effects of the pandemic will remain well into 2022 or longer. The annual result will also be affected by existing uncertainties, which can be seen in the short-term booking behavior of passengers.