by Lufthansa Flyer | Mar 15, 2012 | Airlines |
In absolutely great news from Vienna, Austrian and Lufthansa today announced that Lufthansa will back Austrian with a capital injection of up to 140 million Euros to help Austrian through their challenges. Part of the arrangement may call for flight staff to reorganize and adopt the Tyrolean Air model for employee agreements, but that was wide expected. What I am most happy about is that Austria will be able to perserve its national carrier and be given every chance to succeed. In the press release below, Austria also indicated that it will continue to fly its full compliment of flights and will overhaul the cabins of their long haul aircraft.
To catch up on the events surrounding Austrian, you can read my previous post here.
The Press Release By Austrian:
Austrian Airlines receives capital for all-round renewal
· Lufthansa authorizes capital injection of up to 140 million euros
· Work Program gets green light on all committees
· More than 200 million euros for new aircraft and new cabin
East Meadow, NY, March 15, 2012 – Yesterday, Austrian Airlines was given the green light from Frankfurt for its Work Program that was presented in January 2012. Parent company Lufthansa will support Austrian Airlines with a conditions-based capital increase of up to 140 million euros. The funds will be used to prepare the harmonization of the medium-haul fleet and the consequent restructuring. As part of this, a transition of the flying staff of Austrian Airlines to the collective agreements of Tyrolean Airways might take place. Therefore, nothing will change for customers: Austrian Airlines will continue to be called Austrian Airlines after the restructuring phase and continue to operate a fleet of 80 aircraft to 130 destinations worldwide. It is planned to convert the cabin of the company’s entire long-haul fleet of 10 aircraft over the next upcoming winter. In total, 200 million euros will be invested over the next two years.
Austrian CEO Jaan Albrecht said the following: “We now have the capital needed to implement our plan. Austrian Airlines will continue to be the largest domestic airline, but in a more modern and competitive setting. Its new cost structure will provide the basis for further growth in the Lufthansa Group.”
An overview of the Work Program:
In the past 8 weeks, a total of around 180 million euros in cost reductions or revenue increases has been identified. These include new agreements with partners, an adjusted route network and harmonization of the fleet. Most recently, our politicians confirmed that location-related costs in Vienna will be reduced as well. This consists of a reduction of the tax on flight tickets and the stockpiling of oil, as well as a new fare model with Vienna Airport. A better approach flight route into Vienna will be developed in collaboration with AustroControl. Charges for the licensing of pilots are to be reviewed again this year. With the help of a transition to group subsidiary Tyrolean Airways, additional funds can be raised.
· Route network and fleet harmonization: A new route network plan with a strategic orientation to our home market of Austria and strong Eastern European markets has been developed. In the future, Austrian will increase flights to Sofia, Bucharest and Belgrade. A larger aircraft is to be deployed on the route to Tel Aviv. The routes to Gothenburg, Sochi and Donetsk will be cancelled. Austrian Airlines will increase the flights to London and Barcelona, as well as intra-Austrian flights to Klagenfurt and Linz.
Preparations have been made for the removal of eleven medium-haul aircraft of the type Boeing 737 from the fleet and acquisition of seven mid-range Airbus A320 family. This means that Austrian Airlines will have a harmonized mid-range fleet of 29 Airbus. Retraining of the pilots will begin in March.
Starting this fall, it is planned to completely convert the cabins of the ten aircraft that make up Austrian’s long-haul fleet, adding new seats and an inflight entertainment system.
· Location: An agreement has been reached with Vienna Airport to secure the companies’ common future by strengthening transfer traffic and long-haul development. In total, the Vienna hub and long-haul product at the location should continue being built up. Good preconditions have also been created for doing this with the new Skylink Terminal, which will open its doors in June 2012. In the field of handling, potential savings have been identified as well, and the framework conditions for a longer-term agreement have been defined.
· Costs and revenues: By extending contracts, creating more favorable conditions for office items, building maintenance and car fleet reduction, substantial amounts running into millions of euros will be saved in the field of administration. Meanwhile, on the revenue side, a range of measures is planned, including expansion of corporate customer business by means of cooperations with the Lufthansa Group.
· Staffing: Despite highly intensive and fair negotiations, it proved impossible to reach an agreement over the “Modernization of Collective Agreements” work package for the flying staff. The measures discussed would not themselves have been sufficient to stop the automatic increase in costs from seven percent a year irrespective of the economic trend and success of the company. A transition is now being prepared to the subsidiary Tyrolean. With its cost level, Tyrolean offers a sustainable, forward-looking and competitive foundation.
by Lufthansa Flyer | Mar 3, 2012 | Uncategorized |
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.
by Lufthansa Flyer | Feb 13, 2012 | Airlines, Industry News |
In a press release from Austrian Airlines, several changes have been announced that are designed to realign Austrian’s focus on the markets it serves. These changes make a lot of sense in that they will be adding service on routes that have traditionally had high yields, especially coming into the busy 2012 summer tourist season.
Another change that I applaud is the decision to cease their Vienna-Mumbai route and taking the aircraft flown on that route and re-deploying it on what should be far more lucrative Middle-Eastern routes and to compete with Emirates and Etihad. With Indian carriers having enough problems with profitability and getting enough passengers aboard their aircraft, there is no reason for Austrian to fly into markets that did not yield the results that they desired.
Keep in mind that this moderate change in focus is due directly to Lufthansa’s (parent of Austrian) desire to make Austrian a profitable part of it’s portfolio of carriers. Recently, I wrote about what Lufthansa had asked Austrian to do in order to receive financial assistance in acquiring new aircraft.
Monday’s announcement serves as confirmation that Austrian is taking the steps necessary to deliver on their commitment to Lufthansa. Let hope it continues!
Here is the actual press release that Lufthansa had issued on Monday:
Austrian Airlines reinforces core markets and increases frequencies to Eastern Europe
· More flights east, as well as to London and Barcelona
· Reinforcement of Middle East by use of largest aircraft
· Flights to Tripoli resumed
· Improved connection between business locations of Klagenfurt, Linz and Vienna
East Meadow, NY, February 13, 2012 – Austrian Airlines has taken the first concrete step in its corporate strategy, the 2012 Work Programme. “From the summer of 2012 onwards, we shall sharply increase flight frequencies to our core markets in Eastern Europe, and build up capacity to the Middle East in a trade-off with the destination of Mumbai,” said Austrian’s Executive Board member Andreas Bierwirth, summarizing the key points of the new route network. Furthermore, focusing on these core markets is designed to contribute to increasing the revenue of Austrian Airlines over the long term.
The reworked route network in more detail:
· Reinforcement of Focus East and select destinations in Western Europe
This summer, Austrian Airlines will boost its number of flights in Eastern Europe. The airline will increase flights from Vienna to Bucharest from three to five times per day, and to Sofia from four to up to five times a day. In the winter schedule, the number of flights operated to Belgrade was raised from three to up to four per day. In Western Europe, Austrian Airlines will offer passengers one additional self-operated flight per day to London Heathrow, beginning this summer. Now the carrier will be flying to the British capital four times a day.
Austrian Airlines is building up its flight product to and from Barcelona by one flight a day. From 25th March 2012 onwards, an Austrian flight will be taking off for the Catalonian capital three times a day.
· Better connections between Austrian regions
Austrian Airlines will offer customers more flights within Austria: from 1st March onwards, an extra morning flight will proceed between Klagenfurt and Vienna. Now, Austrian will fly up to five times a day between Carinthia and the national capital. The extra flight to and from Linz, already introduced in the winter schedule, will remain in place in the summer schedule. Thus, Austrian Airlines will fly to and from Upper Austria up to four times a day. Connections to and from Graz, Salzburg and Innsbruck, which are already extremely well-developed, will continue to operate, as will the three flights per day the company operates to and from Altenrhein. The airline, home carrier of Austrian businesses, offers optimal connections to and from the Vienna hub, and from there to approximately 130 destinations worldwide.
· Mumbai aircraft to be used in Middle East from summer onwards
Beginning with the summer schedule, Austrian Airlines will cease its operations to and from Mumbai. Moving forward, the long-haul aircraft previously used on this route, a Boeing 767, will be deployed on flights to and from Tel Aviv and to Tehran. Austrian Airlines continues to fly six times a week to New Delhi.
· Tripoli back in flight schedule
From the summer schedule onwards, Austrian Airlines will be relaunching its flights to Libya, flying five times a week to and from Tripoli. Austrian was temporarily forced to stop flying to and from Libya in February 2011 due to political unrest in the country.
· Three times a day to Stockholm
From the summer onwards, Austrian Airlines will operate three flights a day to Stockholm. This is one trip less since the evening flight will no longer be offered.
Austrian Airlines in USA and Canada
Austrian Airlines provides its customers with a route network of 130 destinations worldwide. Passengers can take flights from either New York JFK, Washington DC or Toronto to Vienna. In Vienna, Austrian Airlines offers time-saving connections and access to over 100 destinations across Europe. In Central and Eastern Europe, the route network is particularly dense: With 46 destinations Austrian Airlines is the market leader throughout the region. Thanks to its favorable geographical location at the heart of Europe, the company’s hub at Vienna International Airport is the ideal gateway between East and West. Austrian Airlines is part of the Lufthansa Group, Europe’s largest airline group, and a member of the Star Alliance, the first global alliance of international airlines. For more information or reservations, visit www.austrian.com.
