Coronavirus crisis puts pressure on Austrian Airlines’ Q2 results

Austrian Airlines has made this announcement:

As a result of the coronavirus crisis and the cessation of Austrian Airlines‘ flight operations for a period of close to three months, Austria’s national carrier generated adjusted earnings before interest and taxes (adjusted EBIT) of minus EUR 99 million in the second quarter of 2020, down from positive results of EUR 46 million in the prior-year quarter. Accordingly, the adjusted EBIT for the first half of 2020 equaled minus EUR 235 million. The number of passengers carried by Austrian Airlines fell by 70 percent to around 2 million due to the pandemic.

“The coronavirus crisis has hit the airline sector with full force. Worldwide travel restrictions almost completely brought flight operations to a standstill in the second quarter. Our business is slowly recovering since the resumption of flights on June 15”, explains Austrian Airlines CFO Wolfgang Jani.

Results in detail
With the exception of humanitarian cargo flights, the second quarter consisted of practically only two weeks of minimum operations in June. Whereas in the previous year the airline carried around four million passengers between April and June, this figure was only 53,000 in 2020. Revenue slumped by 94 percent to EUR 35 million. During the same period, total revenues fell by 90 percent to EUR 59 million (Q2 2019: EUR 610 million). Total expenses for the same period amounted to EUR 158 million, a decrease of 72 percent (Q2 2019: EUR 565 million) compared with the same quarter of the previous year. Adjusted EBIT ultimately amounted to EUR -99 million in the second quarter (Q2 2019: EUR 46 million).

In the first half of 2020, sales revenues fell by 67 percent to EUR 322 million (first half of 2019: EUR 973 million). In the same period, operating expenses fell by 44 per cent to EUR 598 million (first half of 2019: EUR 1,064 million). This was counteracted by a package of short-term cost-cutting measures and short-time working for the entire workforce. Adjusted EBIT, which excludes valuation losses on aircraft disposals, among other items, amounted to EUR -235 million (H1 2019: EUR -53 million). EBIT amounted to EUR -299 million.

Current booking development and capacity utilization
The coronavirus crisis and the related travel restrictions which impacted Austrian Airlines through no fault of its own continue to necessitate a large degree of flexibility in planning business operations. Landing bans in effect from July 16-31, 2020 resulted in flight cancellations and cut the passenger load factor from an average of about 70 percent to 60 percent. Nevertheless, Austrian Airlines registered a large number of short-term bookings, enabling the airline to look into the future with optimism.

In particular, holiday destinations are well booked. For example, routes such as Athens, Larnaca and Thessaloniki show an average passenger load factor of about 90 percent. In terms of flight traffic to neighboring countries, the aircraft flying to Germany and Switzerland show an average capacity utilization of between 60 and 70 percent.

“Business trips and tourist travel as well are slowing picking up steam”, Wolfgang Jani adds. “Nevertheless, we only expect a slow ramping up of the aviation industry. The crisis is far from over, and this will be reflected in the performance indicators for the entire year”, CFO Jani concludes.

In other news, Austrian Airlines calls for comprehensive COVID-19 testing to replace general landing and entry bans:

• A comprehensive COVID-19 testing program for travelers from high risk countries should bring back the freedom to travel
• Landing bans recently triggered widespread uncertainty on the part of travelers
• CEO von Hoensbroech: “Whoever is healthy and not infected should be allowed to travel.”

Last Friday the Austrian Federal Government allowed landing bans for flights from 18 countries to expire. These bans did not apply in other EU member states. Nevertheless, the many different travel regulations in the European Union make it more difficult for people to travel freely and for airlines to reliably plan flight schedules. At a press conference, Austrian Airlines CEO Alexis von Hoensbroech called for comprehensive COVID-19 tests to be carried out on all passengers from high risk countries as a means of alleviating this situation.

“The freedom to travel is an important cornerstone of our modern-day society which should not be curtailed in the long term. Whoever is healthy and not infected should also be allowed to travel”, Austrian Airlines CEO von Hoensbroech stated.

Because of the duration of the coronavirus crisis and the increasing uncertainty on the part of passengers, it makes good sense to introduce health checks on a global basis for people travelling by air. This can only be ensured by carrying out comprehensive COVID-19 tests on travelers from high risk countries. “We are advocating an international solution”, von Hoensbroech emphasizes. “No other means of transport offers as good an opportunity for health checks as the aviation sector. This possibility is exactly what we should leverage in order to facilitate travelling in times of the coronavirus without compromising health protection. This approach is also in the interests of passengers because a further step towards ensuring freedom of travel is also a further step towards returning to normalcy”, he adds. According to Austrian Airlines experts, public authorities and governments are now called upon to collaborate with the airlines in order to introduce safe, practical and cost-effective testing methods and to coordinate them on an international level.

Recently Lufthansa CEO Carsten Spohr joined other airline CEOs form Europe and the U.S. in a letter sent to U.S. Vice President Mike Pence and Ylva Johansson, EU Home Affairs Commissioner, demanding a U.S.-EU testing program to once again enable airlines to operate transatlantic flights. The testing program should replace entry bans and quarantine regulations. Austrian Airlines CEO von Hoensbroech also supports such a solution. “Good flight connections between the USA and Europe are essential for a strong ethnic and economic interdependence between our continents. For this reason, flight connections should be resumed as quickly as possible – of course by optimally combining the freedom to travel with the protection of people’s health”, Mr. von Hoensbroech concludes.

Finally, Austrian Airlines is adding further holiday destinations to its summer flight schedule. The Greek destinations Kalamata, Preveza, Skiathos and Skiros are back in the flight schedule since the beginning of August. Sardinia, with Cagliari and Olbia, and Sicily, with Catania, are also part of the Austrian Holidays program since August. In addition, Austria’s home carrier is also flying to Ibiza again. All flights take place once a week on Saturdays or Sundays.

From September, Austrian Airlines will also fly to the Canary Islands of Gran Canaria and Tenerife every Saturday. Austria’s home carrier is thus adding ten holiday destinations to its summer program. These and other holiday flights can be booked on the Austrian Holidays website and via travel agencies.

Austrian Airlines aircraft photo gallery:

Austrian Airlines aircraft slide show:

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