The Austrian flag carrier and Lufthansa Group subsidiary Austrian Airlines is struggling. The airline is facing financial difficulties and will need aid for continued survival once the crisis is over. The airline is taking drastic measures to save the cash and prevent unnecessary outflow by temporarily suspending operations, retiring aged aircraft and several other things. In a press release, Austrian Airlines announced that they will make certain changes to its fleet. The airline plans to retire the Dash-8 Q400s, Airbus A319s and some Boeing 767s from the fleet by 2022. As the entire Dash-8 and A319 fleet will be retired, only three out of the total six 767s will leave the fleet for the time being, and the remaining will be retired through the subsequent years. The three to be retired right now are registered OE-LAT, OE-LAW, and OE-LAX and are an average of 28 years old. After the process is complete, the fleet size will reduce from a present 80 aircraft to 60 aircraft by 2022.
The Austrian flag carrier also said that it predicts a 20-25% drop in demand this year, and only 75% of the demand before the crisis will return by the end of 2021. Despite the reduction in the fleet, the airline is trying to keep as many of its staff members as possible.
"We got into this crisis through no fault of our own. Now it is our responsibility to make Austrian Airlines fit for the future after Corona. We want to retain our long-haul hub, even if we have no other choice for the time being but to adapt to the somewhat smaller market. Being fit for the future also means that we must be in a position to finance our aircraft, charges, wages and investments, and of course also to repay any charges and loans from Corona grounding," emphasizes Austrian Airlines CEO Alexis von Hoensbroech.
Austrian Airlines Executive Board member Andreas Otto comments: “The entire airline industry is pessimistic. We have to assume that we will reach the ‘pre-corona level’ again in 2023 at the earliest.”
The financial aid for the airline is, however, a very complex matter. It is unclear as to how much aid Austrian needs, but news sites in Austria speculate around €500m and €800m is necessary. The Austrian government, instead of directly funding the airline, is in talks with its parent company, the Lufthansa Group. The Minister of Environment Leonore Gewessler said that the financial aid will come with some strings attached with a focus on the environment. It is unclear what provisions will coincide with the bailout agreement, but options reportedly could be a reduction in short-haul flights to promote rail travel, greater cooperation with rail companies, larger tax contributions, and use of more eco-friendly fuels.
“If we are talking about several hundred million euros in taxpayers’ money, then it is clear that [it] will be linked to conditions,” Gewessler said.
Austrian Airlines was state-owned until 2009 when it was sold with 100% equity to the Lufthansa Group. The Group operates out of five main hubs, Frankfurt, Munich, Vienna, Zurich, and Brussels. Lufthansa is currently evaluating how many of those hubs will be necessary to post the COVID-19 period, but CEO Hoensbroech is confident that the Vienna hub will still exist as it makes strategic sense because the airport serves destinations around the globe.
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