Austrian Airlines to implement a tough savings operation

Austrian Airlines, part of the Lufthansa group, will have to save heavily in the face of stiff competition of low-cost airlines on its home market Vienna, according to Austrian media. The company should reduce annual costs by at least 60 million euros. Hundreds of jobs could disappear in the process.

It would be the largest slim-down operation ever for Austrian Airlines, confronted with a surge in low-cost operators in Vienna following the demise of Air Berlin: next to Lufthansa’s own Eurowings, there is Ryanair subsidiary Lauda, Hungary‘s specialist of Eastern Europe Wizz Air, UK-based easyJet and IAG’s Level.

Austrian has a total of 7,000 employees, after the airline expanded considerably last year, creating 1,200 new jobs. Half of them would disappear in less than one year.

The fleet would also be renewed, with fewer but larger aircraft: Austrian is in the process of phasing out its 16 remaining Bombardier Dash 8 Q400s and replacing them with 10 Airbus A320s by 2021. The long-haul fleet consisting of older Boeing 767 and 777 aircraft should also be rejuvenated.

Flights from regional Austrian airports to Germany would be taken over by Lufthansa. The Eurowings Europe base in Vienna would be discontinued. More should be disclosed during Austrian’s upcoming third-quarter financial results press conference on 7 November.

In the first half of the year, Austrian suffered a loss of 53 million euros. In July, a slightly positive result was assumed for the entire financial year. But Lufthansa had set a profit target of 100 million euros to compensate for the investments in the fleet. Hence there is still a long way to go.

Another Lufthansa subsidiary, Brussels Airlines, stands for a saving operation. With only voluntary departures, the Belgian airline wants to become a smaller but profitable airline. The details of the “Reboot” plan would also be revealed on the same date, 7 November.