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Austrian Airlines: now Lufthansa Group's fastest growing network airline, but Eurowings looms

Austrian Airlines has enjoyed an acceleration in passenger growth, becoming the Lufthansa Group's fastest growing network airline in the first seven months of 2017. It used to be the slowest, with falling traffic between 2012 and 2015, but its 13.7% increase year to date comfortably beat Lufthansa and Swiss' single digit growth.

Nevertheless, Austrian underperforms its fellow network airlines on load factor and profit margins. It is also much more a short/medium haul operator than Lufthansa or Swiss. Its growth may be more to do with restoring previously lost traffic and capacity, rather than anything more durable over the longer term.

It is clear that Lufthansa's preferred growth vehicle remains Eurowings, including the newly acquired Brussels Airlines, which is to be integrated into the group's low cost unit. Together, the so-called 'point-to-point' airlines grew at 25% on a like for like basis.

Eurowings is now the number two airline by seats in Austrian's Vienna hub, with 35 short/medium haul routes. Eurowings is not a true low cost airline in terms of its unit cost performance, but it is lower cost than Austrian. Lufthansa certainly has options other than using Austrian, regarding the operation of the group's short/medium haul network at Vienna.

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