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Austrian Airlines

Austrian Airlines undergoes painful transition

Stéphane Hanot  Feb 03, 2009

VIENNA (eTN) - The dismissal of Austrian Airlines (AUA) CEO Alfred Ötsch shows the seriousness of the situation at Austria’s national carrier, after its financial take-over over by German carrier Lufthansa last December.

Ötsch leaves the airline as he is largely held for responsible for the worsening financial condition of AUA. In March, Ötsch had already announced that Austrian results had been consolidated as it announced a profit of €3.3 million for 2007. Since then, the CEO was forced to review down and down its forecasts for 2008.

In July, Austrian was forecast with a loss of €70 to 90 million, then in October of €100 to 125 million. Then in November, it was mentioned losses up to €400 million due to higher provisions.

Following Ötsch departure, Austrian interim management presented a dramatic picture of the airline a day later. Austrian needs to save another €225 million in costs despite a recent financial injection of €200 million authorized by the European Union to save the airline.

Cutting costs immediately will translate into reduction in wages for the management between 5 percent and 10 percent as well as for employees, the introduction of part-work time and a further reduction in Austrian network. The airline has confirmed to close down flights to Baia Mare in Romania, Burgas in Bulgaria and the opening of Alep in Jordan is definitely abandoned.

Recently, AUA had already suspended its Mumbai flights. Employees are worried of possible redundancies, which could mount up to 1,000, before Lufthansa takes over the management by next spring.

The German carrier has already started to implement a “Partners Project” to evaluate synergies between Austrian Airlines and Lufthansa.

“ Everything will come under review but we have been assured that Austrian Airlines will preserve completely its identity and commercial autonomy of decision, as it was already the case for Swiss. This is a big motivation for us,” says Gayle Berry Zoechbauer, manager Incoming Tourism Management of Austrian Airlines who was present at Austria’s Travel Show ACTB.

Among possible future AUA CEO, Lufthansa has already thought of appointing Swiss International Air Lines Chief Network and Distribution officer Harry Hohmeister.


Austrian Airlines undergoes painful transition
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