16-Mar-2012 1:05 PM

Austrian Airlines receives capital increase of up to EUR140m from Lufthansa

Austrian Airlines stated (15-Mar-2012) its Work Programme, presented in Jan-2012, was approved, with parent company Lufthansa to support Austrian Airlines with a conditions-based capital increase of up to EUR140 million. The funds will be used to prepare the harmonisation of the medium-haul fleet and the consequent restructuring. As a part of this, a transition of the flying staff of Austrian Airlines to the collective agreements of Tyrolean Airways might take place with Austrian CEO Jaan Albrecht said stating: “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 costs structure will provide the basis for further growth in the Lufthansa Group: Details include:

  • Network and fleet: Despite the restructure, Austrian Airlines noted that "nothing will change for the customer". Austrian Airlines will continue to be called Austrian Airlines after the restructuring phase, operating a fleet of 80 aircraft to 130 destinations. The carrier is however developing a new route network plan "with a strategic orientation to our home market of Austria and strong Eastern European markets". In future, Austrian will operate to Sofia, Bucharest and Belgrade with increased frequency and deploy larger aircraft to Tel Aviv. The routes to Gothenburg, Sochi and Donestk will be cancelled. Austrian Airlines will increase services to London and Barcelona and expand intra-Austrian services to Klagenfurt and Linz;
  • Fleet: Preparations have been made for the removal of 11 Boeing 737s and acquisition of seven A320 family aircraft meaning the carrier will have mid-range fleet of 29 Airbus aircraft. It will retain pilots at Mar-2012 levels. From autumn 2012, it is planned to completely convert the cabins of the 10 aircraft that make up Austrian’s long-haul fleet, adding new seats and an inflight entertainment system. In total, EUR200 million will be invested over the next two years;
  • Cost reductions: In the past eight weeks, around EUR180 million in cost reductions or revenue increases has been identified. These include new agreements with partners, an adjusted route network and harmonisation of the fleet. Most recently, there has also been confirmation from the government that location-related costs in Vienna will be reduced. These include 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 is also to be worked out in a working group with AustroControl," it said. Charges for the licensing of pilots are to be reviewed again this year. With the help of a transition to group subsidiary Tyrolean, additional funds can be raised;
  • Location: An agreement has been reached with Vienna Airport to "secure the companies’ common future by strengthening transfer traffic and long-haul development";
  • Costs and revenues: Austrian Airlines stated: "By extending contracts and creating more favourable 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. On the revenue side, meanwhile, a range of measures is planned, including expansion of corporate customer business by means of cooperations with the Lufthansa Group";
  • Staffing: A transition is now being prepared to the subsidiary Tyrolean. With its cost level, Tyrolean offers a "sustainable, forward-looking and competitive foundation".  [more - original PR]

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