Austrian reports full year slump

Austrian Airlines Group has reported a full year loss despite a record traffic result
and ‘Focus East’ growth.
Summing up the annual balance sheet, Austrian Chief Executive Officer Vagn Soerensen made the following statement: ‘By incorporating new destinations into the route network and increasing our existing frequency volume, we have again been able to build strongly on our ‘Focus East’ specialisation in 2005. The main reasons for the slump in the result in 2005 were the high additional cost of kerosene, the weak demand for transfer traffic in the first quarter triggered by the doubling in the security charge, and continuing overcapacity in the European aviation industry. Due to our offensive marketing and sales measures and the huge effort made by employees throughout the Austrian Airlines Group, however, we maintained record load factors from May 2005 onwards, which produced a record traffic result of more than 10.1 million passengers carried for the year as a whole. The ‘Turnaround in the Turnaround Programme’, which was introduced in 2005 and includes numerous individual measures designed to improve our cost and revenue position, should produce a positive effect on the result amounting to around EUR 100m from 2007. We expect to be able to balance our result (EBIT adjusted) for 2006. Although this will undoubtedly be a challenge, it remains entirely feasible if we continue to dedicate all our energies to achieving this objective.’

The EBIT adjusted of the Austrian Airlines Group worsened in the financial year 2005, declining from EUR 9.3m to EUR -52.0m. When adjusted to account for special items, overwhelmingly resulting from the sale of aircraft, the EBIT fell to EUR -100.0m (2004: EUR 74.4m).

At EUR -29.6m, the financial result of the Austrian Airlines Group remained essentially the same as the preceding year (2004: -26.0m). On this basis, the loss before tax was EUR -129.6m, remaining significantly below the profit for 2004 (EUR 48.4m). Overall, this resulted in a net loss for the year of   EUR -129.1m (2004: EUR 43.9m). One of the key factors in the result trend being so sharply out of line with expectations was the continuing rise in the price of oil in 2005, which brought the Group total additional costs of almost EUR 144.5m. Another reason was the weakness of demand in the first quarter, which caused a significant fall in revenue.

Chief Financial Officer Thomas Kleibl made the following statement on the balance sheet of the Austrian Airlines Group: ‘Despite the fact that performance remained below expectations, we were able to continue improving our balance sheet structure and reduce liabilities in 2005. Net debt fell from       EUR 1,244.5m to EUR 1,053.1m. This means there has been a balance sheet reduction of 3.2% while we have increased operating revenue by 5.4 %.’