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Austrian Airlines expects 2013 turnaround

Austrian Airlines expects 2013 turnaround

The restructuring program launched by the Austrian Airlines Group has started manifesting itself in the corporate results. An “avalanche” of costs arose in 2012 from taxes on tickets and from increases in fuel prices. It amounted to a further €94 million in costs. Notwithstanding this, Austrian, which is the country’s largest domestic carrier, registered an operative loss in the year 2012 of a mere €10.2 million, after removing special effects (2011: a loss of €59 million). The causes of this improvement were its airplanes’ showing a higher load factor and successes in dampening the effects of automatically-increasing costs. Factor in the one-time effects yielded by the restructuring program and the result is a profit of €65 million.

CEO Jaan Albrecht: “2012 was a hard year. But it gave us a foundation upon which to carry out the turnaround of the Austrian Airlines Group. I am confident that we will achieve a positive operating result as early as 2013 – and that this will be without a boost from any one-time effects.“

The figures in detail:
Total operating revenues rose by 4.4% in 2012 to €2,259 million (2011: €2,163 million). Operating expenditures increased by 2.1%, going from €2,222 million to €2,269 million (adjusted). Taking into account the special effects arising from the operational transition of flight operations to Tyrolean Airways, Austrian Airlines registered in 2012 a non-adjusted operating profit of €65 million, an improvement of €124 million (2011: a loss of €59 million).

The positive special effects came to €75 million. These were comprised, on the one hand, of expenditures of employment compensation, and, on the other, earnings resulting from declines in obligations to provide employee benefits in the years to come. These benefits include bonuses for anniversaries of employment, compensation for termination of employment, and pension payments. Austrian Airlines continues to pay for members staffing flight operations a contribution to corporate pensions amounting to 4% or 5%.

This one-time effect caused Austrian Airlines to realize in 2012 positive operating results. On an adjusted basis, Austrian Airlines registered an annual loss of €10.2 million.


Airplanes return to having a higher load factor
Some 11.5 million passengers flew with Austrian Airlines in the period from January – December 2012, up 1.8% on a y-on-y basis. This was despite our offering of “available seat kilometers” (ASK)’s having been reduced by 4.0%. The rate of utilization (= load factor) rose by 3.8 percentage points to 77.5%.

As of the balance sheet date of December 31, 2012, the Austrian Airlines Group employed 6,236 employees (2011: 6,777 employees). In 2013, some 150 cabin crew, station staff members and pilots will be hired.

Restructuring program proceeds on plan
Austrian Airlines launched at the beginning of 2012 a comprehensive restructuring program. Its focus was on increasing the Group’s ability to compete and profitability. Measures were implemented in 2012 that will cause earnings to improve on the long-term. The centerpiece of these was the transition on July 1, 2012 of flight operations to subsidiary Tyrolean Airways. This bundling of flight operations enabled the reduction of redundancies in the management of flight operations. A corresponding program will be put into operation in 2013.

The harmonization of the intra-Europe fleet has also been progressing. By the end of April 2013, seven new Airbus A320s will join Austrian’s fleet. The fleet of Boeing B737s was successfully sold at the same time. These planes are now being decommissioned on a step-by-step basis.

Focus on our customers
In October 2012, Austrian Airlines launched a product campaign for its long-haul fleet. All of the Boeing B767s and B777s will be equipped by September 2013 with new, modern cabins; new Economy seats; and new Business Class seats featuring horizontal reclining surfaces and a new on-board entertainment system. Three aircraft have already been refitted. More than €90 million will have been invested in the ten airplanes. On May 17, 2013, Chicago will be added as a destination, thus bringing the number of weekly flights to North America to 26. The reservation forecast foresees a passenger load factor of more than 80%.

Positive prospects in 2013
“We are progressing towards being an economically healthy company. We want to fly into the black this year,” concludes Albrecht.