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Austrian Airlines is the national airline of Austria and is based at Vienna International Airport. Along with its regional subsidiary, Tyrolean Airways, and charter arm, Lauda Air, the carrier operates both domestic and international networks, particularly to Eastern Europe and the Middle East.
On 1-Jul-2012, as part of its restructuring and cost reduction programme, Austrian transferred all of its mainline services to Tyrolean. At least 110 pilots refused the transfer, accepting instead very generous redundancy terms. The carrier continues to operate under the Austrian Airlines AOC and under the Austrian brand.
Austrian Airlines is a member of the Star Alliance.
Location of Austrian Airlines main hub (Vienna International Airport)
802 total articles
Transferring Austrian Airlines business to Tyrolean Airlines helped Lufthansa Group operating result
57 total articles
An impending three day strike by Lufthansa pilots – described by the carrier as "one of the biggest walkouts" in its history – highlights what continues to be a challenging labour relations environment for Europe's legacy carriers. In spite of years of competition from LCCs and cost efficient long-haul players, and after significant progress with restructuring programmes, such disputes remain common.
Labour-related issues are affecting a number of other airlines, including Austrian Airlines, Air France, Aer Lingus, SAS and Finnair. Even LCC Norwegian Air Shuttle faces key strategic questions in connection with the use of low-cost labour to grow its nascent long-haul business. In general, however, LCCs enjoy a less unionised environment and greater labour flexibility.
It is not uncommon for labour unions to become more militant as the profit cycle picks up, but airlines cannot always hide behind this excuse. As IAG CEO Willie Walsh has said*, "it is not about unions, but management. Management needs determination and can do it if it wants to…Cost creep is requested by unions, but made by management”.
In 2013, Lufthansa showed the first signs that its SCORE restructuring programme may be having an impact on its results. While its operating result fell from its 2012 level, this was affected by restructuring costs and project implementation costs, which should produce benefits in future years. Adjusting for these one-off costs, underlying profitability improved for the first time since 2010, mainly due to lower unit costs.
Ahead of an imminent change of leadership at the top of the group, Lufthansa has also announced a couple of small, but fairly radical, changes. First, it will separately incorporate its FFP and, second, it will bring its aircraft depreciation policy more in line with market practice.
Lufthansa is now somewhere close to half way through SCORE. Outgoing CEO Christoph Franz, who will leave on 30-Apr-2014, can be credited with instigating the programme and delivering a fairly solid start. As with all restructuring programmes, their success or failure can only really be judged when they are complete and it will be the responsibility of new CEO Carsten Spohr to steer the group to the right result at the programme’s end in 2015.
All Nippon Airways and Lufthansa have allocated the four lucrative slots they collectively received for service to Tokyo's Haneda airport. All four slots will be used to shift existing services at Narita to Haneda, although ANA will add a Narita-Dusseldorf service independent of the Haneda slot allocation. This will further grow ANA and Lufthansa's share of the Germany-Japan market to 89%, with the balance held by Japan Airlines.
Of the 11 Haneda slots awarded to ANA, only five will be used for new services while five replace Narita services and one slot (to China) remains unallocated. This is a better result than European carriers, which received six slots but will use only one for new growth.
Overall the Japan-Europe market will grow 4% in northern summer 2014. ANA is driving growth, but this is hard to pin on its success in receiving Haneda slots; theoretically the growth could have occurred without the slots. Whether or not limited Haneda slots offer a serious constraint, the next two fastest growing carriers in the Japan-Europe market are Turkish Airlines and KLM, which received no Haneda slots and are not part of a joint venture.
The recent decision by Lufthansa to end its codeshare agreement with Turkish Airlines (THY) came as a surprise to most observers. Talks between the two carriers over the past 18 months had been seeking closer co-operation, a prospect that had even been discussed by the respective heads of government of Germany and Turkey.
However, the strong growth of THY in Germany has led to imbalances in their relationship. In particular, THY now has a strong presence in secondary German cities away from Lufthansa’s Frankfurt and Munich strongholds. This has undermined Lufthansa’s strategy of funnelling Asia-bound traffic from secondary markets via its hubs as THY increasingly offers an alternative connection via Istanbul.
With fares that Lufthansa cannot match, one of the world’s biggest networks and a product that continues to win plaudits, THY has become a formidable competitor to Lufthansa and its group companies in spite of also being a Star Alliance partner.
Etihad's announcement that it was buying 33.3% of Switzerland-based Darwin Airline was made on the first day of the Dubai Airshow and was easily lost in the fury of orders announced that day.
Darwin only flies aircraft with 50 seats, less than the number of premium seats that will be on many of the 350-plus widebody aircraft Gulf carriers ordered at the airshow. But the announcement is significant, and three reasons stand out.
First, for Etihad the carrier will "connect the dots" in Europe for itself and partners, linking hubs but also tertiary cities, which have largely been passed over by Gulf carriers. Many of these cities are served by the Lufthansa Group. This gives rise to the second significant impact: on Europe's legacy carriers. Gulf carriers changed their long-haul business while European LCCs decimated short-haul. Regional traffic was always typically a burden, and will come under further pressure following Etihad's announcement. Third is that Darwin Airline will re-brand as "Etihad Regional", and Etihad openly states Darwin is only the first carrier to use this new brand. As the industry still digests Etihad's partnership and equity strategy, Etihad promises to change another component of aviation – and raise the stakes in the liberalisation of the industry, especially by stamping its name on a European carrier.
Lufthansa’s 3Q2013 profit numbers all fall, but there is ‘clear improvement’: how to understand this
Lufthansa does not make it easy for the casual observer to understand its financial results. It has three different figures for what is generally called operating profit: ‘EBIT’, ‘operating result’ and ‘normalised operating result’, plus a fourth indicator, ‘adjusted operating margin’. Here is how we paraphrase Lufthansa’s 3Q2013 results communications.
“Underlying profitability is moving in the right direction, in spite of weak currency-affected yields. The SCORE restructuring programme is starting to have a positive effect, but is also bringing one-off costs. The transfer to Germanwings should lead to a profit in short-haul for the first time in five years and Austrian should report an operating profit for the first time since we bought it. Our 2013 operating profit should be EUR600 million to EUR700 million and SCORE should take us to our 2015 target operating profit of EUR2.3 billion. We should have a better view next year, when restructuring and product improvement costs reduce, but our recent aircraft order shows our confidence in the future. Trust us for now”.