Finance Results as at September 30, 2014: Austrian Airlines Aims for Slightly Positive Results in 2

• Operating loss of minus EUR 7 million in the first nine months of 2014
• Provisions for severance payments negatively impact 2014 earnings
• Slightly positive operating results targeted for the entire year 2014

Austrian Airlines, the leading airline in Austria and for Eastern Europe, generated an operating loss of minus EUR 7 million in the first nine months of the current 2014 financial year. The sharp decline in earnings compared to the previous year (Q1-3 2013: EUR 19 million) can be mainly attributed to the non-recurring effects related to balance sheet recognition of severance payments for the flight crew of Tyrolean Airways. It was recently announced that the airline reached a basic settlement on a new collective wage agreement with the Works Council for the flight and cabin crew. This stipulates, amongst other things, the transfer of flight operations and employees from Tyrolean Airways to Austrian Airlines.

"Naturally I am not satisfied with the finance results", says Austrian Airlines CEO Jaan Albrecht. "At the same time I am pleased that we reached an agreement in principle and thus found a solution on going forward into the future. This means we have revised our original guidance downwards once again to achieving slightly positive results this year."

Overview of key figures

Operating expenditures could be held stable in the first nine months of 2014 at EUR 1,648 million, despite the one time expenditures in context with severance payments (1-9 2013: 1,648 Mio. Euro).

Total operating revenues fell slightly by 1.6 percent in the first nine months of 2014 to EUR 1,641 million (Q1-3 2013: EUR 1,667 million). The operating results of Austrian Airlines as at September 30, 2014 amounted to minus EUR 7 million compared to the prior-year operating profit of EUR 19 million.

In the first nine months of 2014, 8.7 million passengers flew with Austrian Airlines, comprising a marginal rise of 0.6 percent from 2013. Austrian Airlines adjusted its flight offering to weakening demand in Europe, but simultaneously succeeded in achieving growth by adding a new destination in the USA and thus expanding its North Atlantic flight service.

Capacity measured in available seat kilometers (ASK) was raised by 4.6 percent. As a consequence, capacity utilization further improved by one percentage point, from 78.8 to 79.8 percent.

The total staff of the Austrian Airlines Group including its fully consolidated subsidiaries amounted to 6,188 employees at the balance sheet date of September 30, 2014 (September 30, 2013: 6,222 employees).

Austrian Airlines continued to achieve a top performance with respect to punctuality. Featuring a 89.9 percent rate of punctuality on departure, the punctuality of Austrian Airlines flights continued to surpass the European average. The regularity of flight operations amounted to 98.8 percent.

Crisis regions in Europe and the Middle East, good performance in North America

Moreover, in its function as a specialist for flights to Eastern Europe, the business of Austrian Airlines continues to be negatively affected by the crisis areas of Ukraine and Russia. Flight service on many routes had to be temporarily cancelled, including Kharkov and Rostov. For this reason, the airline suffered from a decline in operating revenues and passenger volumes in this region. A similar situation exists in the Middle East. Although Austrian Airlines can once again offer regular flights to Erbil and Tel Aviv, it is likely to take a long time until flight service to destinations such as Baghdad, Tripoli and Damascus can be resumed.

In contrast, the performance on long-haul routes to North America has been gratifying for Austrian Airlines. The new destinations of Chicago and Newark are developing extremely well, both in terms of capacity utilization as well as earnings. The expanded flight offering to Washington, where the former Boeing 767 aircraft was replaced by a larger Boeing 777, has also been well received by passengers.

Outlook 2014:

In spite of the previously mentioned crises in important areas of operation, Austrian Airlines is expected to generate moderate passenger growth and increased operating revenue thanks to the expansion of the fleet by one additional long-haul aircraft.

Austrian Airlines now anticipates operating results to be only slightly positive. The change in the profit forecast is mainly due to the necessity to allocate provisions for the severance payments arising as a consequence of the new collective wage agreement.

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