Category Archives: Austrian Airlines

Austrian Airlines has announced a new austerity plan in the wake of losses due to stiff low-cost competition:

Threat of losses in 2019 and 2020: Airline counteracts developments with a package of measures
EUR 90 million should be saved annually, 700-800 budgeted positions in the company are affected
Management Board: “We will fight relentlessly and vigorously against the price and wage dumping practiced by low-cost airlines”

Austrian Airlines is repositioning itself in response to the glut of low-cost airlines at Vienna Airport. From a market standpoint, the airline is bundling its fleet strength in the Austrian capital city, whereas it is initiating tough cost-reduction measures on the corporate side of its business operations. Following six profitable years, the airline could once again find itself in a loss-making situation again due to the cheap flight offerings in Vienna. The company aims to reduce in-house costs by EUR 90 million annually starting in 2021 via efficiency and productivity improvements. Some 700-800 jobs will likely be impacted by the “PE20” program. A large number of these job cutbacks will be absorbed via staff fluctuation. The long-term objective of the airline is to modernize its fleet and then once again return to a strong growth path.

“We have to reposition ourselves in order to survive the brutal competition of the low-cost airlines”, says Austrian Airlines CEO Alexis von Hoensbroech. “In part, the measures will be painful because they drain resources which we tediously built up over the past years. However, at the same time they are necessary in order to safeguard the future of Austrian Airlines as the leading airline in Austria.”

“We will not retreat a single millimeter on the Viennese market”
With respect to the aviation market, Austrian Airlines wants to resolutely stand up to the low-cost airlines. Austria’s national carrier plans to bundle its fleet strength in Vienna within the context of its #DriveTo25 strategy program by stationing all its aircraft available in Austria in the country’s capital city where the price war is raging. In this regard the airline is getting support from the Lufthansa Group. Flights to Germany from Austria’s regional airports will be gradually taken over and operated by Lufthansa. In December the Salzburg-Frankfurt route will already be converted from an “OS” to a “LH” flight number, thus freeing up aircraft. The decentralized crew bases in the federal provinces will be shut down, and the affected employees will be given an offer to transfer to Vienna.

In order to defend its hub in Vienna, Austrian Airlines is upgrading its fleet at the same time. 18 small turboprop aircraft are already being replaced by ten larger medium-haul, Airbus A320 jets, thus leading to considerable productivity improvements. The first of the additional A320 aircraft will already take off on behalf of Austrian Airlines in November.

“The replacement of the aircraft and the closer cooperation with our sister company Eurowings enables us to bundle our fleet strength in Vienna”, states CCO Andreas Otto. “We will not retreat a single millimeter and will maintain our premium strategy.”

Enhancing the effectiveness of Austrian Airlines

At the same time, Austrian Airlines wants to reorganize operations to be more effective and hard-hitting as a company. In this case, “more effective” means more productive and efficient. Larger aircraft result in lower unit costs, or, simply put, more passengers can be transported with fewer crews. Ultimately, fleet harmonization leads to a reduction of complexity. Eliminating one type of aircraft correspondingly eliminates costs for the separate training of pilots, flight attendants and technicians as well as the storage of spare parts.

“The harmonization of our fleet alone will enable us to make a significant contribution towards improving earnings”, says CFO Wolfgang Jani.

Moreover, Austrian Airlines plans improvements in corporate processes based on automation, digitalization, centralization and cutbacks in material and non-staff expenses. Productivity and process efficiency measures should save EUR 90 million each year over the upcoming two years. “We want to calmly discuss this all with our Works Council”, according to plans announced by the Austrian Airlines CFO.

In this connection, he hopes he will receive support from the country’s social partners and political decision makers. “´Highly-qualified jobs will be eliminated because the low-cost carriers offer considerably lower salary and social standards. Fair competition is fine, but please, it should not involve committing social fouls”, Jani adds.

Cooperation with Eurowings, adjustments to long-haul offering

Starting in January 2020, the sister company Eurowings will operate four aircraft in wet lease on behalf of Austrian Airlines from its base in Vienna. In this way, the two airlines will be able to more closely coordinate their route offerings, enabling new direct flights to Barcelona, Birmingham, Nuremberg, Rome and Zadar to be added to the Austrian Airlines portfolio of destinations in its flight schedule.

Austrian Airlines will eliminate the vacation destination of Miami from its flight offering in the upcoming 2020 summer flight schedule. The route, which was only served on a seasonal basis in the summer months up until now, was no longer profitable despite all efforts made by the airline. The last Austrian Airlines aircraft from Miami will land in Vienna tomorrow, November 8, 2019. Flights on the Vienna-Los Angeles route, also only operated in the summer season, will be offered five times per week in the 2020 summer flight schedule instead of seven weekly flights up until now. The airline has not yet decided what will be done with its freed-up long-haul capacities.

Strategy remains valid: achieve capability to invest and modernize the fleet

The #DriveTo25 strategy program announced in January remains in effect despite the onslaught of low-cost airlines. In short, the underlying aim is to achieve the capability to make investments and modernize the long-haul fleet which is of crucial importance to Vienna as a flight hub.

“Our long-term strategy remains in full force. We want to modernize Austrian Airlines and make it profitable and investment-ready”, concludes CEO Alexis von Hoensbroech. “Investment-ready means that the company will able to finance the necessary investments on its own”.

Top Copyright Photo: Austrian Airlines Airbus A320-214 OE-LBJ (msn 1553) AMS (Ton Jochems). Image: 946840.

Austrian Airlines aircraft slide show:

Austrian Airlines to take over some Eurowings routes from Vienna

Austrian Airlines has made this announcement:

Austrian Airlines and Eurowings are repositioning themselves in Austria and reinforce their cooperation. The common goal is to strengthen the Vienna hub and expand decentralised traffic from the Austrian federal states.

Austrian Airlines will be responsible for network planning at the Vienna hub in order to improve the management of transfer traffic. As of January 1, 2020, Eurowings will deploy four aircraft including crews in wet lease for Austrian Airlines.

At the same time, Eurowings will strongly expand its presence at Salzburg Airport and increase the number of Airbus A319 aircraft stationed in the City of Mozart to a total of three. Furthermore, Eurowings will expand its leisure flight program from Innsbruck Airport offering full charter flights to warm-water destinations. Thereby Eurowings is pursuing its strategy of consistently concentrating on decentralized routes i.e. point-to-point flight traffic. Today Eurowings is already number one at four major German airports, namely Düsseldorf, Hamburg, Cologne and Stuttgart.

Within the context of the closer collaboration of the two airlines, the following destinations will be offered in the route network of Austrian Airlines as of January 2020: two daily flights will be operated to Barcelona (expansion from twelve to 14 weekly flights). Birmingham will be served up to once daily (increase from four to seven flights per week). Up to two flights will be operated every day to Nuremberg (twelve weekly flights instead of eleven), and frequencies to Rome will rise to three daily flights (21 flights each week instead of twelve). Up to one daily flight will be offered to Zadar (thus raising the number of weekly flights from two to seven). The leisure flight program (of Austrian and Eurowings) of summer 2020 will be published at a later date.

Check-in for all these flights will take place at Austrian Airlines in Terminal 3 at Vienna Airport in the future. The existing scheduled flight connections of Eurowings between Vienna and Düsseldorf, Hamburg, Hannover, Stuttgart and Cologne will remain part of the Eurowings route network and will be operated out of Germany as in the past. These flights will continue to take off from Terminal 1 in Vienna.

For Austrian Airlines, this step provides added impetus to its #DriveTo25 strategy. The ten additional A320 aircraft already announced earlier this year will be complemented by four wet lease aircraft from Eurowings. In January, Austrian Airlines reported that it would phase out its smaller turboprop aircraft by 2021 and increase its medium-haul Airbus fleet from 36 to 46 airplanes. This change in the fleet composition is currently being implemented. The first of the ten A320 aircraft is planned to land in Vienna shortly. The 37th Airbus will take off on behalf of Austrian Airlines starting in December.

Austrian Airlines gradually reorganizes its decentralized routes

In connection with the strategic concentration on its home airport in Vienna, the decision was made by Austrian Airlines to reorganize decentralized routes between the Austrian federal states and Germany.

In an initial step, Austrian Airlines is reorganizing flight operations on the Salzburg-Frankfurt and Graz-Frankfurt routes within the Lufthansa Group and will likely transfer responsibility for these routes to Lufthansa at the turn of the year 2019/2020. The new flight connections can be booked as of October 23, 2019. The number of flights on these two routes will not change: In the upcoming winter flight schedule, a total of 28 weekly flights will be offered linking Salzburg and Frankfurt, whereas 26 flights will be operated between Graz and Frankfurt each week. The previous flight times will be maintained with the exception of a few small adjustments.

However, overall seating capacity between Salzburg and Frankfurt will increase due to the fact that Lufthansa will deploy Airbus A319 and thus larger aircraft than has been the case up until now. A mix of Airbus A319, Embraer 190 and Bombardier CRJ900 jets will be deployed on the Graz-Frankfurt route. Total seating capacity on this route will remain unchanged. In the future, Austrian Airlines will make use of two Embraer aircraft currently stationed in Salzburg and Graz for flights departing from Vienna to destinations in its European route network.

Austrian Airlines aircraft photo gallery:

Austrian Airlines used drones to inspect its aircraft

Austrian Airlines uses drones to inspect its aircraft:

Since the middle of the year, Austrian Airlines has been testing a completely new technology for the purpose of carrying out technical inspections of its aircraft fleet. The aircraft are checked for paintwork or structural damage by means of autonomous drones developed by the French startup “Donecle”. This innovation not only reduces the workload for technicians of Austria’s national carrier, but the shorter duration of the checks lasting less than two hours instead of the previous time required of four to ten hours enables quicker availability of the aircraft in daily flight operations.

Austrian’s financial results for the first half of 2019: Earnings still in the red before the strong summer months

Austrian Airlines has reported its financial results for the first half of 2019:

Finance Results

• Q2 profit of EUR 46 million insufficient to offset Q1 loss of EUR 99 million
• Adjusted EBIT down to minus EUR 53 million in the first half-year
• 2019 remains a challenging year: glut of budget airlines and expensive jet fuel burden earnings

Austrian Airlines reported adjusted earnings before interest and taxes (adjusted EBIT) of EUR 46 million in the second quarter of 2019. However, this performance was not enough to compensate for the loss of EUR 99 million generated in the previous quarter. For this reason, Austria’s flag carrier announced an adjusted EBIT of minus EUR 53 million in the first half of 2019. Investments in the fleet and service had a positive impact, as reflected in the significant rise in passenger volume of six percent to 6.7 million.

“The sharp decline in earnings can be mainly attributed to two factors: the glut of budget airlines in Vienna and higher jet fuel costs”, states Austrian Airlines CFO Wolfgang Jani.

Revenue in the first half of 2019 fell by three percent to EUR 982 million (H1 2018: EUR 1,008 million). Total operating expenditures in the same period were up two percent to EUR 1,073 million (H1 2018: EUR 1,048 million). The main reason for the higher costs were the additional expenses for jet fuel and routine maintenance. Jet fuel costs rose by 17 percent or EUR 34 million whereas technical expenditures were up 47 percent or EUR 27 million. Adjusted EBIT, which deducts book gains from sales of aircraft, amongst other items, totaled minus EUR 53 million (H1 2018: EUR 5 million). EBIT in the first six months of 2019 equaled minus EUR 54 million.

Considering the second quarter by itself, adjusted EBIT totaled EUR 46 million, down 41 percent or EUR 32 million from the previous year (Q2 2018: EUR 78 million). Accordingly, the large first-quarter loss could not be offset.

More flights, more passengers, high capacity utilization

Austrian Airlines significantly expanded its traffic volume. In the first six months of 2019, the airline transported 6.7 million passengers, comprising a year-on-year increase of six percent or about 375,000 more passengers than in the first half of 2018. The intercontinental business developed exceptionally well, with passenger volume up 13.2 percent during the first half-year. The overall flight offering in available seat kilometers (ASK) increased by five percent to 13.6 billion. Capacity utilization (passenger load factor) further improved by 2.3 percentage points to 78.1 percent.

The regularity of operation rose to a gratifying 99.0 percent in the first half of 2019 (H1 2018: 98.1 percent). However, punctuality on departure fell to 76.9 percent. This can be primarily attributed to air traffic control problems at Vienna Airport, which have quadrupled compared to the first half-year 2018. The punctuality rate on arrival equaled 79.9 percent.

Fleet renewal takes shape: six additional jets, turboprop phase-out

Austrian Airlines has carried out 66,419 flights deploying a total of 82 aircraft, or an average of about 364 flights per day, since the beginning of the year. The two aircraft leased from Adria Airways as part of a wet lease agreement are not included. The renewal of the fleet announced in January 2019 is beginning to take shape. In July 2019 Austrian Airlines signed lease agreements for six additional A320 aircraft. The first of these jets will be transferred in August 2019. On balance, ten additional Airbus jets will replace the airline’s 18 Dash 8-400 turboprop airplanes by 2021. Accordingly, Austrian Airlines is expanding its Airbus fleet from 36 to 46 aircraft.

“The expansion of our Airbus fleet will help us in competing with budget airlines. This is because these jets enhance customer comfort. The change in the fleet structure will also positively impact our unit costs because we can offer more seats in fewer aircraft”, says Austrian Airlines CFO Wolfgang Jani.

The total staff of Austrian Airlines amounted to 6,999 employees at the balance sheet date of June 30, 2019 (June 30, 2018: 7,118 employees). The reduction of 119 employees (minus two percent) is related to productivity gains in connection with the last reform of the collective wage agreement and the fact that fewer pilots are undergoing retraining.

Outlook for the entire year 2019: positive earnings but significantly below the prior year

Austrian Airlines expects an economically challenging year as a consequence of low-cost competition at Vienna Airport and high jet fuel prices. “We continue to anticipate a difficult year in 2019. We will generate positive results, but substantially below the previous year”, Austrian Airlines CFO Wolfgang Jani adds. In 2018 Austrian Airlines had an adjusted EBIT of EUR 83 million.

Top Copyright Photo (all others by the airline): Austrian Airlines Airbus A321-211 OE-LBF (msn 1458) ZRH (Rolf Wallner). Image: 946842.

Austrian Airlines aircraft slide show:

Austrian Airlines to add six Airbus A320s, will phase out its DHC-8-402s

Austrian Airlines has made this announcement:

The fleet development announced in January 2019 is taking shape now: Austrian Airlines has now secured six additional A320 aircraft. The first of these jets is scheduled for delivery in August. Within the next few days, it will already receive the red-white-red Austrian color scheme in Jacksonville, FL.

A total of ten additional jets are to replace the 18 DHC-8-400 turboprop aircraft by 2021.

Austrian will thus increase its Airbus fleet from 36 to 46 aircraft.

As of June 30, 2019, the entire Austrian Airlines fleet consisted of 82 aircraft.

Four A320 aircraft from Avianca Brasil, two from Juneyao

Four of the six additional A320 jets are leased from Aviation Capital and previously flew at Avianca Brasil. In part, these aircraft are already being subject to the necessary delivery check.

The first A320 plane is expected to be transferred to Austrian Airlines in the middle of August. Additional planes will be supplied at the end of August as well as in September and October. Following the necessary modifications and adaptations, the first aircraft should be put into operation on Austrian Airline’s behalf in December of this year. Austrian Airlines will take possession of two other Airbus jets purchased from CDB Aviation, which are currently operated by Star Alliance Connecting Partner Juneyao.

In 2019 Austrian Airlines has already decommissioned two DHC-8-400 aircraft. The hand over of a further DHC-8-400 turboprop is planned this year. Nine other Dash turboprops are scheduled to be phased out from the Austrian Airlines fleet in the course of 2020, the remaining six will follow in 2021.

Details on the six A320:

Registration   Year                     Type          Engine             Delivery (planned)   Prior/current Operator
OE-LZA         September 2007    A320-214   CFM56-5B4/P    January 2020          Juneyao
OE-LZB         October 2007        A320-214   CFM56-5B4/P    January 2020          Juneyao
OE-LZC         September 2012    A320-214   CFM56-5B4/3    August 2019           Avianca Brasil
OE-LZD         October 2012        A320-214   CFM56-5B4/3    August 2019           Avianca Brasil
OE-LZE         September 2013    A320-214   CFM56-5B4/3    September 2019      Avianca Brasil
OE-LZF         November 2013     A320-214   CFM56-5B4/3    October 2019          Avianca Brasil

Top Copyright Photo: Austrian Airlines Bombardier DHC-8-402 (Q400) OE-LGH (msn 4075) BSL (Paul Bannwarth). Image: 947071.

Austrian Airlines aircraft slide show:

European Elections 2019: Austrian Airlines declares its commitment to Europe: “Austrian Airlines is also European”

Austrian Airlines has made this announcement in support of the European Elections:

• Austrian Airlines has displayed the EU flag on all aircraft since 1997
• The Austrian flag carrier employs about 7,000 people from 58 nations
• The network links Austria to 100 European destinations

Shortly before the European elections 2019, Austrian Airlines has declared its clear commitment to Europe. Austrian Airlines CEO Alexis von Hoensbroech puts it this way: “We are Austria’s flag carrier. At the same time, we have been displaying the EU flag on all our aircraft since the year 1997 out of conviction. Austrian Airlines is also European.”

In this way, Austrian Airlines joins many other European companies in actively promoting high voter turnout at the European elections. The elections for the European Parliament will take place in Austria this coming Sunday, May 26, 2019. “Austrian Airlines has profited enormously from Europe’s political as well as economic integration. Europe is a project of peace and prosperity. The success of this project is important for the future of all of us. Every vote cast in these elections is thus a vote cast to support this project”, von Hoensbroech adds.

Austrian Airlines employs a total of 7,083 people from 40 European and 18 non-European countries, and links 101 cities within Europe with each other. Austrian Airlines temporarily had the EU flag painted on the nose of an Airbus A320 with the aircraft registration OE-LBL in order to visibly display its commitment to Europe and the European Union.