In order to safeguard and continue to expand its market position throughout Russia, the Austrian Airlines Group will implement a mutual cooperation concept together with AiR Union, a top-player in Russia’s airline business. This cooperation-perspective is based on a “memorandum of understanding” signed by both partners.

Austrian’s Chief Executive Officer, Alfred ?-tsch, issued the following statement regarding this new development: ‘Our cooperation with AiR Union is truly a milestone in our Focus East strategy. We are proud of the fact that this move enables us to advance our market position an enormous distance eastwards - in effect, to the shores of the Pacific Ocean.’

Austrian’s Chief Commercial Officer, Dr. Josef E. Burger, went on to explain: ‘Both in terms of passenger traffic and in the cargo segment, the AiR Union agreement will be seen as a model for cooperation between Eastern and Western airlines. With its far-reaching route network, which extends from the Urals across Central Asia and out to the Pacific, AiR Union is the perfect partner for us in the East. In return, we will act as the Russian airline’s ‘preferred Western carrier’, a role made possible by our strong network in Western Europe, the Levant and on North Atlantic routes, where we will continue to deepen and widen our product range in 2007. In a spirit of mutually beneficial partnership, we will be working on a multi-hub strategy, with Vienna, Moscow (Domodedovo), Samara and Krasnojarsk as our hubs.’

Founded in 2004, AiR Union is an alliance of five Russian airlines, Kras Air, Omskavia, Samara Airlines, Domodedovo Airlines and Sibaviatrans. The carriers operate a fleet of over 100 aircraft, carried approximately 3.2 million passengers last year and reported turnover of around EUR 573 million in the same period. The hubs of Moscow-Domodedovo, Samara and Krasnojarsk put AiR Union in the perfect position to cover and take full advantage of the vast Russian market.

Moscow-Domodedovo is an ideal hub for transfer passengers using the extensive route network of AiR Union in the East, which stretches from the Ural Mountains to the Pacific Coast. AiR Union is planning flights from Samara to Vienna, and possibly also from Krasnojarsk to Vienna via Moscow. Aircraft of the types Boeing 767, 757 and 737 will be used by AiR Union on these routes. In return, Austrian will transport passengers via Moscow and out into the route network of AiR Union.

The cooperation is set to begin in the 2007 summer schedule, at the end of March next year. Both partners will be able to achieve network synergies through codeshare flights, blocked space agreements and pro rata agreements, all of which are currently under negotiation.

The Austrian Airlines Group currently operates services to five cities in Russia. In addition to Moscow and St. Petersburg, the Austrian Airlines scheduled route network takes in Jekaterinburg, and the cities of Rostov on Don and Krasnodar in the south of the country. Around 196,000 passengers travelled on Austrian’s routes to and from Russia in 2005. This corresponds to an above-average level of growth of 60% compared to 2003, when the company launched its Focus East Offensive. Austrian Airlines carried almost 500,000 more passengers in the Focus East region in total.
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