Being reported in the Austrian Business Journal FriedlNews, rumors are surfacing about Lufthansa potentially reorganizing Austrian into a new airline. According to the article below, it would result in a regional carrier similar to the Tyrolean model. Again, this is speculation at this point and no official positions have been taken.

Published on www.FriedlNews.com:

March 2, 2012

AUA´s Insolvency Becomes More Probable

German newspapers report that Lufthansa could establish a new Austrian airline company. AUA could be left then.

As the restructuring process at AUA proves very difficult, the German holding company Lufthansa seems to lose its patience. The Austrian airline was taken over in 2009, after AUA already faced financial difficulties. Initially, Lufthansa planned to reach the turnaround of AUA in 2011. However, last year, AUA posted losses of € 64m.

Above all, negotiations with AUA´s workforce are hard to conclude for AUA´s management. The collective agreements, which are said to be too expensive, were terminated in January. New agreements could not be reached yet. Anyway, a deep cut seems to be inevitable. After new agreements again failed last week, AUA´s CEO had to postpone the conclusion of the austerity package. The next supervisory board meeting will take place by mid-March.

Now, Lufthansa is said to consider establishing a new Austrian airline company. “There are plans to let AUA fall and to create a new Austrian airline company based on the regional subsidiary Tyrolean.” Süddeutsche Zeitung writes. This model is already well-known at Lufthansa. Before, also the former Belgian airline Sabena became bankrupt and the new Brussels Airline was established based on the former Delta Air. The Swiss regional airline Crossair was re-named into “Swiss” after the insolvency of Swissair. The same model could be applied at AUA, as Tyrolean has a significantly cheaper collective agreement. Salaries of pilots at Tyrolean only reach 75% to 80% of AUA´s level.

AUA´s CEO reaffirmed his warnings. As AUA is loss-making for seven years, a deep cut is essential, Albrecht underlined.

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