Austrian Aims to Return to a Growth Path after Restructuring Period

• 400 new jobs to be created over the next 3-5 years
• New market image: Austrian Airlines to emphasize individualization and Austria
• Much is new: new strategy, new fleet, new destinations, new price concept

Following the restructuring which took place in recent years, Austria's flag carrier, Austrian Airlines, will return to a cautious growth path. A new pricing model, new medium-haul fleet, new destinations, the expansion of the business as an operating carrier within the Lufthansa Group and a new red-white-red market image comprise the underlying basis.

"The restructuring carried out over the past years has made us fit again for the rough aviation market", says Austrian Airlines CEO Jaan Albrecht. "Following the agreement reached with the Works Council, we once again have a good basis and renewed opportunities for growth. We want to take advantage of this".

Thanks to the restructuring efforts, Austrian Airlines has worked its way up to emerge as the cost leader within the Lufthansa Group. This can also be demonstrated by internal orders. For example, since the spring of 2015, Austrian Airlines has been operating four Dash8-400 in wet lease on behalf of its sister company SWISS. The Austrian aircraft have been flying under contract and within the flight network of SWISS but are staffed by Austrian Airlines crews. Austrian Airlines also operates an aircraft for Lufthansa in wet lease and expects further growth impetus, especially in this business segment. This year two Airbus A320 are to be operated by Austrian Airlines personnel on behalf of the sister company Eurowings.

"We anticipate growth in passenger volume, revenue and the total number of our employees during the upcoming 3-5 years", states Austrian Airlines CFO Heinz Lachinger. Business targets foresee an increase of about 10% in the airline's core and additional business as an operating carrier. In absolute terms, Austrian Airlines expects 1.5 million passengers, 400 jobs and a revenue increase of EUR 210 million within the next years. "However, we will continually keep an eye on costs and profitability," CFO Lachinger adds.

"myAustrian": Individualization and new pricing model at the core of the new strategy

Austrian Airlines is launching its new pricing concept for Austrian and European flight traffic in the fall of 2015. Passengers will be given greater freedom of choice when it comes to additional choices. For example, DO&CO à la carte meals, lounge access, additional luggage or other services can be individually booked regardless of the air fare category. This means a passenger will be able to individually design "her" or "his" particular flight. Accordingly, Austrian Airlines includes a "my" before its brand name.

"The name 'myAustrian' should signal to our customers that we aim to put greater emphasis in the future on accommodating individual product wishes. At the same time, we want to strengthen the identification of our employees and customers with "their" airline", says Austrian Airlines CCO Andreas Otto.

As announced last March, passengers will be able to select among four different air fare categories with different service features. In addition to the existing Business Class, three new Economy Class price categories will be introduced for travel in Europe starting in the autumn of 2015, namely "Light", "Classic" and "Flex". Sales will already begin in the summer of 2015. The "Light" category will serve as the least expensive air fare for scheduled flights in Europe for passengers who only take hand luggage on board and do not require any possibility to rebook flights or have air fares reimbursed. The other airlines within the Lufthansa Group will also introduce this new air fare concept.

New tourist destinations: Colombo in Sri Lanka, Menorca, Mauritius, Miami

Austrian Airlines is undergoing a slight strategic reorientation in its route network by adding more tourist destinations. The underlying reason is the trend towards more private trips, especially to warm water destinations in the winter, as a means of offsetting the strongly seasonal business of the airline. Starting on June 20, 2015, Austria's national carrier will inaugurate flight service once a week to Mahon, the capital of the Spanish Balearic island of Menorca, and fly five times each week to Miami as of October 16, 2015. As of October 29, 2015, it will operate a Boeing 767 nonstop from Vienna to Mauritius every Thursday and the return flight on Fridays. Due to strong demand, it will also offer a second flight each week to Mauritius in the period December 19, 2015 to February 27, 2016. As of October 27, 2015, Austrian Airlines aircraft will depart for Colombo, the capital of Sri Lanka, every Tuesday. This comprises a further destination in Asia in the Austrian Airlines route network in addition to Delhi, Bangkok, the Maldives, Beijing and Tokyo.

New aircraft: Embraer replaces Fokker fleet

On March 19, 2015, the Austrian Airlines Supervisory Board gave its stamp of approval to plans to renew the medium-haul fleet. The fleet upgrading featuring a changeover from Fokker to Embraer aircraft will start at the turn of the year 2015/16 and be concluded at the end of 2017. Austrian Airlines intends to invest several hundred million euros in this project.

'Tyrolean Spirit' should be maintained at Austrian Airlines

As already reported, following the agreement reached on a new collective wage agreement for the cockpit and cabin crew, all flight attendants and pilots were transferred from Tyrolean to Austrian Airlines effective April 1, 2015. Thus the entire flight operations were integrated into Austrian Airlines.

"April 1, 2015 will remain an historic day for Austrian aviation. On this day we merged the history of Austrian Airlines and Tyrolean. For us the merger was the starting point for a new Austrian", states CEO Jaan Albrecht.

In Innsbruck, an additionally acquired new Dash 8-400 was christened the 'Tyrolean Spirit', alongside with the merger. "We wish that the 'Tyrolean Spirit' will continue to thrive at Austrian Airlines", says COO Klaus Froese. "Tyrolean has always stood for entrepreneurship, efficiency and adaptability. These are values we also want to maintain at the new Austrian Airlines", Froese adds.

Klaus Froese, former Managing Director of Tyrolean Airways, moved to the Extended Management Board of Austrian Airlines to serve as Chief Operating Officer effective April 1, 2015. Since then, the Extended Management Board has consisted of Jaan Albrecht (CEO), Andreas Otto (CCO), Heinz Lachinger (CFO) and Klaus Froese (COO). Kay Kratky will replace Jaan Albrecht as the new CEO as of August 1, 2015.

New livery, new uniform: The rich red color to remain part of the Austrian Airlines identity

Almost right on time with the fusion, the new uniform and the new livery (aircraft painting) was presented. The new uniform, which will be worn by about 3,500 Austrian Airlines employees in uniform at ground stations and on board as of 2016, was designed by the Austrian designer Marina Hoermanseder. She prevailed against several top designers from Austria by presenting the best concept. Born in Vienna, Hoermanseder has lived and worked in Berlin for several years. Her fashion creations stand for a pronounced individualism and fuses technical refinement with an exalted and elegant design.

According to the designer's ideas, the rich red color will continue to be part of the Austrian Airlines uniform. The female employees in red will vote over the next four weeks whether to retain the red color of the shoes and stockings.

On balance, Austrian Airlines has a turnover of 2.1 billion euros and a staff of approximately 6,000 employees. The fleet consists of 74 aircraft flying to about 130 destinations from its flight hub in Vienna. 2014 Austria's flag carrier had 11.2 million passengers on board. The available seat kilometers (ASK) stood at 23,300.

Austrian will nach Restrukturierung wieder auf Wachstumskurs drehen