Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR

 
Blerg
Topic Author
Posts: 4261
Joined: Tue Jan 09, 2018 11:42 am

Austrian Airlines News and Discussion

Mon Jun 15, 2020 6:00 am

Good morning,

The saga related to Austrian Airlines has finally come to its end. OS has received state aid, guarantees and as of this morning (15.06) they are back in the skies. However, the airline said that in the next two years they plan on shrinking by around 20% among which is a staff reduction by 1.100 of the 7.000 they currently employ.

As it was already reported they will retire 28 aircraft by 2022 which include all of the Q400s as well as all of their A319s and three of the six B767. One of their Q400s was supposed to go to Croatia Airlines however that deal fell through as a result of the ongoing crisis.

In Q1 2020 Austrian Airlines recorded a loss of €136 million, revenue declined by 24%, passenger volume dropped by 27% and EBIT dropped from negative €99 million to negative €136 million. In addition to al that, Austrian Airlines received growth guarantees that their growth (more like recovery) won't lag behind that in Munich or Zurich. These guarantees are valid until 2023 after which any growth will have to be paid for by the airline.

“This means that the Vienna hub cannot be put at a disadvantage in the successive ramp-up of flight operations. After that we will continue to grow, but we will then have to finance this growth ourselves.”

https://skift.com/2020/06/14/lufthansa- ... r-by-2022/

Competition has already activated their operations in Vienna with Wizz Air already announcing a new round of destinations for this summer including, among others, Barcelona, Bucharest and Brussels. Ryanair has decided against terminating Laudamotion after a deal with the employees was struck, however their fleet in Vienna will shrink from 16 to 10 aircraft.

We will have to see how OS operates in this post-corona world and how their finances perform.

https://www.aviation24.be/airlines/luft ... ion-euros/
 
User avatar
seahawk
Posts: 9750
Joined: Fri May 27, 2005 1:29 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 6:06 am

They won´t survive. They were not comeptitve against Wizz and Ryanair before the crisis and are even less competitive now. LH group will be the second Alitalia.
 
KFTG
Posts: 864
Joined: Sun Apr 28, 2019 12:08 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 6:12 am

A good rule of thumb. Any announcement an airline makes more than 6 months about their "plans", take with a grain of salt. Actually, better off ignoring it.
 
Blerg
Topic Author
Posts: 4261
Joined: Tue Jan 09, 2018 11:42 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 6:27 am

seahawk wrote:
They won´t survive. They were not comeptitve against Wizz and Ryanair before the crisis and are even less competitive now. LH group will be the second Alitalia.


Personally I think they will do fine until 2022/2023 which is when their contracts with employees expire and which is when they are set to operate on their own. Unfortunately OS struggled a lot due to high costs and I don't see them addressing this issue during all these negotiations. I wasn't under the impression they had too many employees but rather than costs in Austria are making them uncompetitive when faced with Wizz Air and Ryanair which are attacking them from all sides.
 
AA737-823
Posts: 5501
Joined: Wed Mar 01, 2000 11:10 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 7:00 am

I'm curious to see what they end up replacing 767's and 777's with.
I can hardly see how they'd afford a 787 or 330/350 new from factory. But they'll have to have something, sometime, obviously.
I also think they'd be a great candidate for the C-series/A220, but at this point, that's just a pipe dream.
 
Toinou
Posts: 296
Joined: Sun Apr 14, 2019 8:21 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 7:20 am

Blerg wrote:
Personally I think they will do fine until 2022/2023 which is when their contracts with employees expire and which is when they are set to operate on their own. Unfortunately OS struggled a lot due to high costs and I don't see them addressing this issue during all these negotiations. I wasn't under the impression they had too many employees but rather than costs in Austria are making them uncompetitive when faced with Wizz Air and Ryanair which are attacking them from all sides.

I'm interested, what costs are making them uncompetitive?
After all, they are in the same group than LX, which probably has much higher salaries.
 
Blerg
Topic Author
Posts: 4261
Joined: Tue Jan 09, 2018 11:42 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 7:33 am

Toinou wrote:
Blerg wrote:
Personally I think they will do fine until 2022/2023 which is when their contracts with employees expire and which is when they are set to operate on their own. Unfortunately OS struggled a lot due to high costs and I don't see them addressing this issue during all these negotiations. I wasn't under the impression they had too many employees but rather than costs in Austria are making them uncompetitive when faced with Wizz Air and Ryanair which are attacking them from all sides.

I'm interested, what costs are making them uncompetitive?
After all, they are in the same group than LX, which probably has much higher salaries.


It's all relative, Swiss isn't facing tough competition in Zurich from Wizz Air and Ryanair the same way Austrian Airlines is in Vienna. Furthermore, we all remember how Swiss was destroyed by easyJet in Geneva some years ago.
 
Toinou
Posts: 296
Joined: Sun Apr 14, 2019 8:21 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 8:04 am

Blerg wrote:
Toinou wrote:
Blerg wrote:
Personally I think they will do fine until 2022/2023 which is when their contracts with employees expire and which is when they are set to operate on their own. Unfortunately OS struggled a lot due to high costs and I don't see them addressing this issue during all these negotiations. I wasn't under the impression they had too many employees but rather than costs in Austria are making them uncompetitive when faced with Wizz Air and Ryanair which are attacking them from all sides.

I'm interested, what costs are making them uncompetitive?
After all, they are in the same group than LX, which probably has much higher salaries.


It's all relative, Swiss isn't facing tough competition in Zurich from Wizz Air and Ryanair the same way Austrian Airlines is in Vienna. Furthermore, we all remember how Swiss was destroyed by easyJet in Geneva some years ago.

Ok, thanks. So the problem is on the local market, not generally speaking.
And you're right, LX doesn't have much competition in ZRH.
In the case of GVA, I would tend to say that LX (or SR in its time) destroyed himself by destroying its network and customer fidelity. (I don't know well the dynamic in BSL but it seems somewhat similar, just having to take into account the fact that the distance to ZRH is much shorter.) That being said, I have the feeling that on the markets they kept, LX is not doing that bad in GVA. Some links are mostly aimed at connections (ZRH, FRA, MUC) but even others are doing good.
 
a350lover
Posts: 899
Joined: Sun Dec 24, 2017 11:21 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 8:25 am

Curious to see what's going to change in the long haul operation with the reduction of those 767 frames. If Austrian was already notably small in regards to this, I wonder what's going to be cut after this. The more they depend on the short haul operation, I believe the more they'll suffer from tough LCC competition in VIE.
 
Blerg
Topic Author
Posts: 4261
Joined: Tue Jan 09, 2018 11:42 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 8:33 am

a350lover wrote:
Curious to see what's going to change in the long haul operation with the reduction of those 767 frames. If Austrian was already notably small in regards to this, I wonder what's going to be cut after this. The more they depend on the short haul operation, I believe the more they'll suffer from tough LCC competition in VIE.


From what I remember both Boston and Miami are indefinitely cut.
 
runway23
Posts: 2337
Joined: Sat Jan 15, 2005 2:12 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 8:45 am

Blerg wrote:
a350lover wrote:
Curious to see what's going to change in the long haul operation with the reduction of those 767 frames. If Austrian was already notably small in regards to this, I wonder what's going to be cut after this. The more they depend on the short haul operation, I believe the more they'll suffer from tough LCC competition in VIE.


From what I remember both Boston and Miami are indefinitely cut.


+ Montreal launching next year (or never).

The decision to keep 3 767s is curious. They were already the only LH Group airline with 767s, now with a fleet of 3 there must be sizable costs related to keeping such a small fleet. Having a common fleet of 777s (or 787s) would make a lot more sense.

Toinou wrote:
Blerg wrote:
Toinou wrote:
I'm interested, what costs are making them uncompetitive?
After all, they are in the same group than LX, which probably has much higher salaries.


It's all relative, Swiss isn't facing tough competition in Zurich from Wizz Air and Ryanair the same way Austrian Airlines is in Vienna. Furthermore, we all remember how Swiss was destroyed by easyJet in Geneva some years ago.

Ok, thanks. So the problem is on the local market, not generally speaking.
And you're right, LX doesn't have much competition in ZRH.
In the case of GVA, I would tend to say that LX (or SR in its time) destroyed himself by destroying its network and customer fidelity. (I don't know well the dynamic in BSL but it seems somewhat similar, just having to take into account the fact that the distance to ZRH is much shorter.) That being said, I have the feeling that on the markets they kept, LX is not doing that bad in GVA. Some links are mostly aimed at connections (ZRH, FRA, MUC) but even others are doing good.


GVA was destroyed by SR and EZY/EZS just seized the opportunity.

The past few years (certainly up to Corona) showed that LX managed to turn-around an unprofitable operation in GVA with the right aircraft and route network - even post Corona GVA has 9 aircraft based which is 1 less than last summer, 2 more than in 2018. No reason OS can't do a similar thing in VIE.
 
Toinou
Posts: 296
Joined: Sun Apr 14, 2019 8:21 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 9:08 am

runway23 wrote:
Toinou wrote:
Blerg wrote:

It's all relative, Swiss isn't facing tough competition in Zurich from Wizz Air and Ryanair the same way Austrian Airlines is in Vienna. Furthermore, we all remember how Swiss was destroyed by easyJet in Geneva some years ago.

Ok, thanks. So the problem is on the local market, not generally speaking.
And you're right, LX doesn't have much competition in ZRH.
In the case of GVA, I would tend to say that LX (or SR in its time) destroyed himself by destroying its network and customer fidelity. (I don't know well the dynamic in BSL but it seems somewhat similar, just having to take into account the fact that the distance to ZRH is much shorter.) That being said, I have the feeling that on the markets they kept, LX is not doing that bad in GVA. Some links are mostly aimed at connections (ZRH, FRA, MUC) but even others are doing good.


GVA was destroyed by SR and EZY/EZS just seized the opportunity.

The past few years (certainly up to Corona) showed that LX managed to turn-around an unprofitable operation in GVA with the right aircraft and route network - even post Corona GVA has 9 aircraft based which is 1 less than last summer, 2 more than in 2018. No reason OS can't do a similar thing in VIE.

They could probably get some inspiration but it's not exactly the same: for LX, GVA is a secondary airport, not really a hub as it caters almost only to the local market, with very few connections. At the same time, OS in VIE is a main (and only) hub, so they have to feed the local market and connections to improve the economics of their long-haul offer. Following parts of LX did iin GVA would mean a significant resizing of the company, which Austrian government seems to want to avoid.

I'm wondering what market they target. Local Austrians is a no-brainer but do they promote themselves as a gateway to Austria? It's a country that has lots to offer to tourists, which could drags tons of people, especially from Asia and North America, to which they have flights. Plus, VIE is quite a convenient place to start/end a tour in central Europe.
They probably can't hope as much business traffic as LX, but on the leisure market (not necessarily the cheapest one), I think they could have a real edge.
 
GLANKG
Posts: 107
Joined: Fri Feb 02, 2018 9:19 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 9:57 am

Toinou wrote:
I'm wondering what market they target. Local Austrians is a no-brainer but do they promote themselves as a gateway to Austria? It's a country that has lots to offer to tourists, which could drags tons of people, especially from Asia and North America, to which they have flights. Plus, VIE is quite a convenient place to start/end a tour in central Europe.
They probably can't hope as much business traffic as LX, but on the leisure market (not necessarily the cheapest one), I think they could have a real edge.

OS mainly focus on Austrian outbound tourism (maybe OS doesn't have enough frames, maybe yields are low), inbound tourism traffic especially from Asia are mostly at Asian carriers' hands, TPE alone has 301k annual passengers to VIE and OS doesn't fly the route. NH/CI/BR/KE/AI/ plus ME2 (EY to resume flights soon) all carrying tourists to VIE, TG might have more Austrian tourists tho.
 
User avatar
Aquila3
Posts: 569
Joined: Sun Nov 14, 2010 3:18 pm

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 9:58 am

Toinou wrote:
They could probably get some inspiration but it's not exactly the same: for LX, GVA is a secondary airport, not really a hub as it caters almost only to the local market, with very few connections. At the same time, OS in VIE is a main (and only) hub, so they have to feed the local market and connections to improve the economics of their long-haul offer. Following parts of LX did iin GVA would mean a significant resizing of the company, which Austrian government seems to want to avoid.

I'm wondering what market they target. Local Austrians is a no-brainer but do they promote themselves as a gateway to Austria? It's a country that has lots to offer to tourists, which could drags tons of people, especially from Asia and North America, to which they have flights. Plus, VIE is quite a convenient place to start/end a tour in central Europe.
They probably can't hope as much business traffic as LX, but on the leisure market (not necessarily the cheapest one), I think they could have a real edge.

They absolutely promote themselves as a gateway to Austria, from the livery, to the uniform, to the music in the background. But, well, Vienna is also seat of some significant organizations , like the UN , IAEA, OPEC. Plus a bunch of relevant financial and industrial enterprises. All these people won't fly Ryan or Wizz. It is the second biggest German speaking city in the world, after all, and not the cheapest. I fly OS a while for business, an I would say they not really a leisure oriented carrier. Their C/J seats are usually well busy and some by tourists, too. They got a bunch of "cultural" tourists , of artists (with their instruments a real trademark on OS) and some looking for sports in cheap places like Kitzbühel. I think in the last years LH put them in a situation they can not cope with. They wanted them to improve their economics using 30 Y/O third hand planes. Now they want them to grow as a hub cutting most of the international flights. I would immagine that as cost, with the same airplane, they are on the same level of LH mainline. Of course they cannot compete with the their HPLS (High Price Low Service) brand Eurowings. The design was always to replace them in VIE with Eurowings, and that might well be on schedule. It remains to be seen if that will work well for LH due to their dominant position in central EU or if someone will take a slice of their business in Vienna.
chi vola vale chi vale vola chi non vola è un vile
 
Blerg
Topic Author
Posts: 4261
Joined: Tue Jan 09, 2018 11:42 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 9:59 am

Toinou wrote:
runway23 wrote:
Toinou wrote:
Ok, thanks. So the problem is on the local market, not generally speaking.
And you're right, LX doesn't have much competition in ZRH.
In the case of GVA, I would tend to say that LX (or SR in its time) destroyed himself by destroying its network and customer fidelity. (I don't know well the dynamic in BSL but it seems somewhat similar, just having to take into account the fact that the distance to ZRH is much shorter.) That being said, I have the feeling that on the markets they kept, LX is not doing that bad in GVA. Some links are mostly aimed at connections (ZRH, FRA, MUC) but even others are doing good.


GVA was destroyed by SR and EZY/EZS just seized the opportunity.

The past few years (certainly up to Corona) showed that LX managed to turn-around an unprofitable operation in GVA with the right aircraft and route network - even post Corona GVA has 9 aircraft based which is 1 less than last summer, 2 more than in 2018. No reason OS can't do a similar thing in VIE.

They could probably get some inspiration but it's not exactly the same: for LX, GVA is a secondary airport, not really a hub as it caters almost only to the local market, with very few connections. At the same time, OS in VIE is a main (and only) hub, so they have to feed the local market and connections to improve the economics of their long-haul offer. Following parts of LX did iin GVA would mean a significant resizing of the company, which Austrian government seems to want to avoid.

I'm wondering what market they target. Local Austrians is a no-brainer but do they promote themselves as a gateway to Austria? It's a country that has lots to offer to tourists, which could drags tons of people, especially from Asia and North America, to which they have flights. Plus, VIE is quite a convenient place to start/end a tour in central Europe.
They probably can't hope as much business traffic as LX, but on the leisure market (not necessarily the cheapest one), I think they could have a real edge.


I would also add that Swiss faced easyJet while Austrian has to deal with Wizz Air and Ryanair. Both of these have lower costs than easyJet and are generally far more aggressive in their strategy and attacks. It would be interesting to see how Wizz Air would do if they had to face W6/FR in GVA.
 
Blerg
Topic Author
Posts: 4261
Joined: Tue Jan 09, 2018 11:42 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 10:01 am

runway23 wrote:
Blerg wrote:
a350lover wrote:
Curious to see what's going to change in the long haul operation with the reduction of those 767 frames. If Austrian was already notably small in regards to this, I wonder what's going to be cut after this. The more they depend on the short haul operation, I believe the more they'll suffer from tough LCC competition in VIE.


From what I remember both Boston and Miami are indefinitely cut.


+ Montreal launching next year (or never).

The decision to keep 3 767s is curious. They were already the only LH Group airline with 767s, now with a fleet of 3 there must be sizable costs related to keeping such a small fleet. Having a common fleet of 777s (or 787s) would make a lot more sense.

Toinou wrote:
Blerg wrote:

It's all relative, Swiss isn't facing tough competition in Zurich from Wizz Air and Ryanair the same way Austrian Airlines is in Vienna. Furthermore, we all remember how Swiss was destroyed by easyJet in Geneva some years ago.

Ok, thanks. So the problem is on the local market, not generally speaking.
And you're right, LX doesn't have much competition in ZRH.
In the case of GVA, I would tend to say that LX (or SR in its time) destroyed himself by destroying its network and customer fidelity. (I don't know well the dynamic in BSL but it seems somewhat similar, just having to take into account the fact that the distance to ZRH is much shorter.) That being said, I have the feeling that on the markets they kept, LX is not doing that bad in GVA. Some links are mostly aimed at connections (ZRH, FRA, MUC) but even others are doing good.


GVA was destroyed by SR and EZY/EZS just seized the opportunity.

The past few years (certainly up to Corona) showed that LX managed to turn-around an unprofitable operation in GVA with the right aircraft and route network - even post Corona GVA has 9 aircraft based which is 1 less than last summer, 2 more than in 2018. No reason OS can't do a similar thing in VIE.


I saw the other day that this summer OS is resuming long-haul destinations with 9 weekly frequencies and all operated with the B767. I guess they kept this plane due to its size as it will be easier to fill it than a much larger and more expensive 772.
 
RvA
Posts: 445
Joined: Tue Sep 15, 2015 12:37 pm

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 11:06 am

Any odds on those 767s disappearing in favour to be replaced by some second hand LH/SN/LX A330/A340? The 787s on order I believe were delayed right?
 
airhansa
Posts: 380
Joined: Wed Jan 08, 2020 3:18 pm

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 4:25 pm

I don't consider it logical for LH to have so many airline brands. This would be a good time for consolidation, keeping only LH and EW. Expand EW at the expense of OS to fight off other low cost airlines.

The VIE hub is perplexing because its location is ideal for a low cost airline hub, but it's silly to place it in the most expensive place in that region. For an Asian airline it would be better to pick up Alitalia or something in the Baltic region for a European hub IMO.
 
Blerg
Topic Author
Posts: 4261
Joined: Tue Jan 09, 2018 11:42 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 4:27 pm

airhansa wrote:
I don't consider it logical for LH to have so many airline brands. This would be a good time for consolidation, keeping only LH and EW. Expand EW at the expense of OS to fight off other low cost airlines.

The VIE hub is perplexing because its location is ideal for a low cost airline hub, but it's silly to place it in the most expensive place in that region. For an Asian airline it would be better to pick up Alitalia or something in the Baltic region for a European hub IMO.


I highly doubt Austrians would agree to that especially now when they got their conditions accepted. Seems like national pride isn't letting them. Remember the mess that erupted when that was supposed to happen in Belgium?
 
User avatar
Rajahdhani
Posts: 610
Joined: Wed Sep 28, 2016 3:13 pm

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 4:40 pm

Blerg wrote:
I saw the other day that this summer OS is resuming long-haul destinations with 9 weekly frequencies and all operated with the B767. I guess they kept this plane due to its size as it will be easier to fill it than a much larger and more expensive 772.


So, thinking that over, perhaps the 772 (especially considering the they will increasingly be able to pick up a fleet at 'depressed' prices) at small numbers could be had relatively easy (just as an example, DL's 777s are recently refurbished and retired).

Being the sole operator of 767s in the group, and with those 767s not getting any newer - even if fully paid off for by now, has future costs that (especially if worried about managing long-term costs, and perhaps driving down your seat costs) may make it increasingly difficult to keep in fleet. I mean, sure everyone is dropping their 767s, and the desert may be filled with them soon, but if your competitors all drop the aircraft - and OS is going to choose to keep the 767 and hope to compete - they are going to find themselves at a disadvantage.
 
airhansa
Posts: 380
Joined: Wed Jan 08, 2020 3:18 pm

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 4:41 pm

Blerg wrote:
airhansa wrote:
I don't consider it logical for LH to have so many airline brands. This would be a good time for consolidation, keeping only LH and EW. Expand EW at the expense of OS to fight off other low cost airlines.

The VIE hub is perplexing because its location is ideal for a low cost airline hub, but it's silly to place it in the most expensive place in that region. For an Asian airline it would be better to pick up Alitalia or something in the Baltic region for a European hub IMO.


I highly doubt Austrians would agree to that especially now when they got their conditions accepted. Seems like national pride isn't letting them. Remember the mess that erupted when that was supposed to happen in Belgium?


The LH brand isn't so nation-specific however. If anything it's still quite "nationalistic" for the countries that were part of the Hanselatic league.

My view wasn't that the OS hub should entirely go away, but that most of the flights should be re-branded as LH, while the remaining ones become re-branded as EW. If it remains a cost-effective operation, then I'd go as far as keeping the OS flight certificate but re-branding the planes under the LH banner.
 
Toinou
Posts: 296
Joined: Sun Apr 14, 2019 8:21 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 4:55 pm

airhansa wrote:
Blerg wrote:
airhansa wrote:
I don't consider it logical for LH to have so many airline brands. This would be a good time for consolidation, keeping only LH and EW. Expand EW at the expense of OS to fight off other low cost airlines.

The VIE hub is perplexing because its location is ideal for a low cost airline hub, but it's silly to place it in the most expensive place in that region. For an Asian airline it would be better to pick up Alitalia or something in the Baltic region for a European hub IMO.


I highly doubt Austrians would agree to that especially now when they got their conditions accepted. Seems like national pride isn't letting them. Remember the mess that erupted when that was supposed to happen in Belgium?


The LH brand isn't so nation-specific however. If anything it's still quite "nationalistic" for the countries that were part of the Hanselatic league.

My view wasn't that the OS hub should entirely go away, but that most of the flights should be re-branded as LH, while the remaining ones become re-branded as EW. If it remains a cost-effective operation, then I'd go as far as keeping the OS flight certificate but re-branding the planes under the LH banner.


I think you underestimate the advantage you take by being perceived as a "national" carrier. For most customers, it would probably be going a bit far to talk about "customer fidelity" but I know many people who would look favorably to an offer by their national carrier, even when it may be a slightly worse option (in terms of price or convenience).
And don't fool yourself, in most European country, Lufthansa is perceived as very nation-specific!
 
Blerg
Topic Author
Posts: 4261
Joined: Tue Jan 09, 2018 11:42 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 5:08 pm

Rajahdhani wrote:
Blerg wrote:
I saw the other day that this summer OS is resuming long-haul destinations with 9 weekly frequencies and all operated with the B767. I guess they kept this plane due to its size as it will be easier to fill it than a much larger and more expensive 772.


So, thinking that over, perhaps the 772 (especially considering the they will increasingly be able to pick up a fleet at 'depressed' prices) at small numbers could be had relatively easy (just as an example, DL's 777s are recently refurbished and retired).

Being the sole operator of 767s in the group, and with those 767s not getting any newer - even if fully paid off for by now, has future costs that (especially if worried about managing long-term costs, and perhaps driving down your seat costs) may make it increasingly difficult to keep in fleet. I mean, sure everyone is dropping their 767s, and the desert may be filled with them soon, but if your competitors all drop the aircraft - and OS is going to choose to keep the 767 and hope to compete - they are going to find themselves at a disadvantage.


They would be doing what Icelandair is doing however they are a niche carrier, Austrian Airlines isn't really one. Getting more 767s could be a good way forward but only as a short-term solution until they get their house in order, as a stepping stone towards a new chapter. However I think with or without additional long-haul flights I think they will suffer because they mostly lost any chance at profitability on the short-haul flights.
 
DUSZRH
Posts: 222
Joined: Thu Jan 05, 2017 12:17 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 5:24 pm

Blerg wrote:
seahawk wrote:
They won´t survive. They were not comeptitve against Wizz and Ryanair before the crisis and are even less competitive now. LH group will be the second Alitalia.


Personally I think they will do fine until 2022/2023 which is when their contracts with employees expire and which is when they are set to operate on their own. Unfortunately OS struggled a lot due to high costs and I don't see them addressing this issue during all these negotiations. I wasn't under the impression they had too many employees but rather than costs in Austria are making them uncompetitive when faced with Wizz Air and Ryanair which are attacking them from all sides.


Looking at their respective VIE networks, it seems more like W6/FR(OE) are mainly attacking each other, as they are fighting for 2nd spot. (Flying low frequency routes on the same days, often similar times, etc.)

Moreover, to my surprise, OS broke even last year, while OE lost tens of millions in VIE and given the competitive landscape and the not vastly different cost structure (OE/W6), so did probably W6.
 
jwjsamster
Posts: 45
Joined: Thu Jun 10, 2010 12:12 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 5:36 pm

Toinou wrote:
airhansa wrote:
Blerg wrote:

I highly doubt Austrians would agree to that especially now when they got their conditions accepted. Seems like national pride isn't letting them. Remember the mess that erupted when that was supposed to happen in Belgium?


The LH brand isn't so nation-specific however. If anything it's still quite "nationalistic" for the countries that were part of the Hanselatic league.

My view wasn't that the OS hub should entirely go away, but that most of the flights should be re-branded as LH, while the remaining ones become re-branded as EW. If it remains a cost-effective operation, then I'd go as far as keeping the OS flight certificate but re-branding the planes under the LH banner.


I think you underestimate the advantage you take by being perceived as a "national" carrier. For most customers, it would probably be going a bit far to talk about "customer fidelity" but I know many people who would look favorably to an offer by their national carrier, even when it may be a slightly worse option (in terms of price or convenience).
And don't fool yourself, in most European country, Lufthansa is perceived as very nation-specific!


My partner is Austrian and she believes that Austrians do prefer to fly Austrian than Lufthansa and regard it as the better choice. I wouldn't be surprised if they keep the brand around.

The landscape in aviation is going to be changing significantly over the next couple of years. Essential travel will most likely go to these big airlines and not to Laudamotion or Ryanair.
 
User avatar
InnsbruckFlyer
Posts: 292
Joined: Sat Nov 25, 2017 1:35 pm

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 5:45 pm

Blerg wrote:
airhansa wrote:
I don't consider it logical for LH to have so many airline brands. This would be a good time for consolidation, keeping only LH and EW. Expand EW at the expense of OS to fight off other low cost airlines.

The VIE hub is perplexing because its location is ideal for a low cost airline hub, but it's silly to place it in the most expensive place in that region. For an Asian airline it would be better to pick up Alitalia or something in the Baltic region for a European hub IMO.


I highly doubt Austrians would agree to that especially now when they got their conditions accepted. Seems like national pride isn't letting them. Remember the mess that erupted when that was supposed to happen in Belgium?


Contrary to my username, I'm not Austrian, but living in Austria has made me realize that Austrians have a blind love for their airline. Everybody absolutely loves OS, and whenever I bring up my opinion that OS should absorb into LH, I'm met with harsh criticism. So while I agree with airhansa, Austrians definitely won't let OS become LH, at least without putting up a fight.
Last flown aircraft: DH8D OE-LGN < DH8D OE-LGI < E195 OE-LWE < DH8D OE-LGI < A320 D-AIUR < A320 D-AIZM < B738 PH-HZJ < B737 PH-XRD < B772 N766AN < B738 N855NN < B788 N45905 < A319 N808UA < A320 N482UA < B752 N19117
 
vahancrazy
Posts: 192
Joined: Sat Jun 23, 2007 5:54 pm

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 6:28 pm

If you destroy the national brand, you will be exposed to more competitors. European countries have centuries or even thousand years of tradition. Thus, a national brand still has a value.

If you kill Austrian brand, LH brand is as powerful as TAP, EVA air or Avianca.
The same is true for IAG group or AF-KL groups. Once you remove the national brand, your value is dramatically lowered.
 
marcogr12
Posts: 482
Joined: Sun Mar 04, 2018 2:36 pm

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 6:49 pm

InnsbruckFlyer wrote:
Blerg wrote:
airhansa wrote:
I don't consider it logical for LH to have so many airline brands. This would be a good time for consolidation, keeping only LH and EW. Expand EW at the expense of OS to fight off other low cost airlines.

The VIE hub is perplexing because its location is ideal for a low cost airline hub, but it's silly to place it in the most expensive place in that region. For an Asian airline it would be better to pick up Alitalia or something in the Baltic region for a European hub IMO.


I highly doubt Austrians would agree to that especially now when they got their conditions accepted. Seems like national pride isn't letting them. Remember the mess that erupted when that was supposed to happen in Belgium?


Contrary to my username, I'm not Austrian, but living in Austria has made me realize that Austrians have a blind love for their airline. Everybody absolutely loves OS, and whenever I bring up my opinion that OS should absorb into LH, I'm met with harsh criticism. So while I agree with airhansa, Austrians definitely won't let OS become LH, at least without putting up a fight.


Exactly..Austrians are not Germans and will never accept their airline losing the austrian brand/identity for the sake of pan-european Lufthansa-nized airline.. LH tried to do that with Eurowings in Belgium and failed miserably..Just as Swiss wouldn't accept it either were they in trouble.
Flying is breathing..no planes no life..
 
User avatar
A321Lufthansa
Posts: 262
Joined: Mon Jun 18, 2018 9:40 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 7:04 pm

Does anybody have thoughts when exactly this year will we see those 3 767s going to the desert?
Last flown aircrafts: A21N TC-LSF < B738 TC-JVY < E190 D-AECF < B77W VP-BGC < A320 VP-BOM < A320 VQ-BES < A320 OE-LBO < A21N CS-TJO < A21N CS-TXC < E190 CS-TPQ < A319 F-GRXC < A321 F-GTAH < B738 SP-LWF < E175 SP-LII
 
Bhoy
Posts: 562
Joined: Tue Apr 18, 2006 1:50 pm

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 7:05 pm

How does this guarantee that Vienna’s growth doesn’t lag behind Munich and Zurich work if during that period, OS is cutting 20% of the fleet/staff?
 
Achtstein
Posts: 2
Joined: Sat Nov 14, 2015 3:15 pm

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 8:09 pm

By everyone else also cutting...
 
GLANKG
Posts: 107
Joined: Fri Feb 02, 2018 9:19 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 8:13 pm

Indeed by everyone cutting, LH said they will retire 100 frames. Even Lauda reduced its VIE fleet by 40%.

As for OS brand, it was kept before Covid-19 and there was a good reason for it, it has always been like this in Europe, remember the failed BA-KL merge? Now that LHG is to receive Austrian government money and they legally guaranteed keeping OS brand & VIE hub, I don't really know what's there to discuss.
Last edited by GLANKG on Mon Jun 15, 2020 8:20 pm, edited 1 time in total.
 
airhansa
Posts: 380
Joined: Wed Jan 08, 2020 3:18 pm

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 8:19 pm

marcogr12 wrote:
InnsbruckFlyer wrote:
Blerg wrote:

I highly doubt Austrians would agree to that especially now when they got their conditions accepted. Seems like national pride isn't letting them. Remember the mess that erupted when that was supposed to happen in Belgium?


Contrary to my username, I'm not Austrian, but living in Austria has made me realize that Austrians have a blind love for their airline. Everybody absolutely loves OS, and whenever I bring up my opinion that OS should absorb into LH, I'm met with harsh criticism. So while I agree with airhansa, Austrians definitely won't let OS become LH, at least without putting up a fight.


Exactly..Austrians are not Germans and will never accept their airline losing the austrian brand/identity for the sake of pan-european Lufthansa-nized airline.. LH tried to do that with Eurowings in Belgium and failed miserably..Just as Swiss wouldn't accept it either were they in trouble.


Do you think that every single locality needs their own airline? Bavarian Airlines? Andorran Airlines?

Lufthansa may be associated with Germany, but the name is multi-national and derived from the Hanseatic League. If a merger between the airlines went through with a serious advertisement effort showing the links between the Hanseatic League and Lufthansa, then the worries about German branding no longer need to be kept.

From my perspective, there are simply too many airline brands in Europe. LH is the simplest to merge without losing too much brand value (unlike say, KLM-Air France where both brands are very strong, or IAG, where both brands are very weak). Furthermore high speed rail will dent the need for airline travel in Mainland Europe further.
 
Blerg
Topic Author
Posts: 4261
Joined: Tue Jan 09, 2018 11:42 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 8:28 pm

GLANKG wrote:
Indeed by everyone cutting, LH said they will retire 100 frames. Even Lauda reduced its VIE fleet by 40%.

As for OS brand, it was kept before Covid-19 and there was a good reason for it, it has always been like this in Europe, remember the failed BA-KL merge? Now that LHG is to receive Austrian government money and they legally guaranteed keeping OS brand & VIE hub, I don't really know what's there to discuss.


Lauda and Austrian might be cutting but Wizz Air isn't. Also, OS might have received the funds and guarantees but that doesn't it's enough to ensure they start operating profitably in the near future or ever. Competition will still be tough out there and we will have to see how they cope with this new reality. Personally I think there is a lot we could discuss.
 
RvA
Posts: 445
Joined: Tue Sep 15, 2015 12:37 pm

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 8:31 pm

airhansa wrote:
marcogr12 wrote:
InnsbruckFlyer wrote:

Contrary to my username, I'm not Austrian, but living in Austria has made me realize that Austrians have a blind love for their airline. Everybody absolutely loves OS, and whenever I bring up my opinion that OS should absorb into LH, I'm met with harsh criticism. So while I agree with airhansa, Austrians definitely won't let OS become LH, at least without putting up a fight.


Exactly..Austrians are not Germans and will never accept their airline losing the austrian brand/identity for the sake of pan-european Lufthansa-nized airline.. LH tried to do that with Eurowings in Belgium and failed miserably..Just as Swiss wouldn't accept it either were they in trouble.


Do you think that every single locality needs their own airline? Bavarian Airlines? Andorran Airlines?

Lufthansa may be associated with Germany, but the name is multi-national and derived from the Hanseatic League. If a merger between the airlines went through with a serious advertisement effort showing the links between the Hanseatic League and Lufthansa, then the worries about German branding no longer need to be kept.

From my perspective, there are simply too many airline brands in Europe. LH is the simplest to merge without losing too much brand value (unlike say, KLM-Air France where both brands are very strong, or IAG, where both brands are very weak). Furthermore high speed rail will dent the need for airline travel in Mainland Europe further.


LH is not a multinational brand name. It’s German and is seen by everyone as such. The official name is Deutsche Lufthansa isn’t it also?
 
GLANKG
Posts: 107
Joined: Fri Feb 02, 2018 9:19 am

Re: Austrian Airlines to shrink by 20% by 2022

Mon Jun 15, 2020 9:22 pm

Blerg wrote:
GLANKG wrote:
Indeed by everyone cutting, LH said they will retire 100 frames. Even Lauda reduced its VIE fleet by 40%.

As for OS brand, it was kept before Covid-19 and there was a good reason for it, it has always been like this in Europe, remember the failed BA-KL merge? Now that LHG is to receive Austrian government money and they legally guaranteed keeping OS brand & VIE hub, I don't really know what's there to discuss.


Lauda and Austrian might be cutting but Wizz Air isn't. Also, OS might have received the funds and guarantees but that doesn't it's enough to ensure they start operating profitably in the near future or ever. Competition will still be tough out there and we will have to see how they cope with this new reality. Personally I think there is a lot we could discuss.


How do you know Wizz Air isn't? They cut quite a few routes across in Europe, I'd be surprised to see if they maintain VIE flying as to pre Covid level.

Contrary to what you always claim, Austrian Airlines has been operating profitably in all of the last 8 years, including last year when Lauda based 16 frames, albeit low profit in comparison with LX/LH, but still miles ahead of likes of Lauda, or the one you like to mention - LO.
 
User avatar
GEUltraFan9XGTF
Posts: 385
Joined: Thu Nov 22, 2018 3:31 pm

Re: Austrian Airlines to shrink by 20% by 2022

Tue Jun 16, 2020 12:50 am

LH should give its newest, used A333s and A32Xs to OS/SN/EW and create one LCC with three liveries based on two frames. LH should then replace its A343/A333 with B789/B78Js. No, LH has not (yet) cancelled or deferred its B787/B779 order. If so, show me a link. Otherwise, it's just wishful thinking.
© 2020. All statements are my own. The use of my statements, including by journalists, YouTube vloggers like "DJ's Aviation", etc. without my written consent is strictly prohibited.
 
User avatar
aemoreira1981
Posts: 3640
Joined: Mon Jan 09, 2017 12:17 am

Re: Austrian Airlines to shrink by 20% by 2022

Tue Jun 16, 2020 1:12 am

I cannot see OS continuing long-haul too much longer unless the Lufthansa Group seriously considers the A321XLR for both EW and SN...as well as for EW to complement the A332s The A321XLR could then operate VIE (and DUS) to BOS, JFK, and EWR, while Eurowings (Europe) can take over all other long-haul services of OS that survive...particularly to BKK. (The Orient would require a transfer to LX or LH.)
 
User avatar
LAXintl
Posts: 24812
Joined: Wed May 24, 2000 12:12 pm

Re: Austrian Airlines to shrink by 20% by 2022

Tue Jun 16, 2020 1:15 am

Funny thing is OS has been in more than a decade of turmoil registering many years of losses since 2005.

I was Vienna in 2006-2008 and met with OS several times and they were wrestling with the same problems as today with staff, fleet, network, etc. They have gone through so many restructuring plans, moving the operation under lower cost Tyrolean Airways subsidiary, various labor agreements, but yet they continue to underperform.

Honestly, I am not sure there is a viable place for OS without endless capital injections. Its longhaul network has many handicaps including limited home market, small and old fleet, along with significant seasonality, while short-range no matter how lean OS tries to get, it cant confront inevitable LCC onslaught.
From the desert to the sea, to all of Southern California
 
Blerg
Topic Author
Posts: 4261
Joined: Tue Jan 09, 2018 11:42 am

Re: Austrian Airlines to shrink by 20% by 2022

Tue Jun 16, 2020 5:47 am

GLANKG wrote:
Blerg wrote:
GLANKG wrote:
Indeed by everyone cutting, LH said they will retire 100 frames. Even Lauda reduced its VIE fleet by 40%.

As for OS brand, it was kept before Covid-19 and there was a good reason for it, it has always been like this in Europe, remember the failed BA-KL merge? Now that LHG is to receive Austrian government money and they legally guaranteed keeping OS brand & VIE hub, I don't really know what's there to discuss.


Lauda and Austrian might be cutting but Wizz Air isn't. Also, OS might have received the funds and guarantees but that doesn't it's enough to ensure they start operating profitably in the near future or ever. Competition will still be tough out there and we will have to see how they cope with this new reality. Personally I think there is a lot we could discuss.


How do you know Wizz Air isn't? They cut quite a few routes across in Europe, I'd be surprised to see if they maintain VIE flying as to pre Covid level.

Contrary to what you always claim, Austrian Airlines has been operating profitably in all of the last 8 years, including last year when Lauda based 16 frames, albeit low profit in comparison with LX/LH, but still miles ahead of likes of Lauda, or the one you like to mention - LO.


The only financial performance I could find was EBIT from 2018, so their financial performance before they paid interests and taxes. That year they managed to record €83 million so I wonder how profitable they would be once they paid all their taxes. On their website their last full financial report is from 2012. From this article, I found this part especially interesting:

'Moreover, a special effect of EUR 40.5 million was reported in 2018, namely the changed accounting treatment for jet engine overhauls. Excluding this effect, the adjusted EBIT would have declined by 55 percent. Earnings before interest and taxes, which also includes book gains from sales of aircraft or aircraft parts, decreased by ten percent or EUR 10 million, from EUR 100 million in 2017 to EUR 90 million in 2018.'

So their 'stellar' performance in 2018 wasn't only due to their solid business performance but rather thanks to spare parts sales and creative accounting.

https://worldairlinenews.com/2019/03/15 ... %20billion.

FYI Wizz Air just announced a new round of destinations from Vienna, that's how I know.
 
GLANKG
Posts: 107
Joined: Fri Feb 02, 2018 9:19 am

Re: Austrian Airlines to shrink by 20% by 2022

Tue Jun 16, 2020 6:21 am

Blerg wrote:
The only financial performance I could find was EBIT from 2018, so their financial performance before they paid interests and taxes. That year they managed to record €83 million so I wonder how profitable they would be once they paid all their taxes. On their website their last full financial report is from 2012. From this article, I found this part especially interesting:

'Moreover, a special effect of EUR 40.5 million was reported in 2018, namely the changed accounting treatment for jet engine overhauls. Excluding this effect, the adjusted EBIT would have declined by 55 percent. Earnings before interest and taxes, which also includes book gains from sales of aircraft or aircraft parts, decreased by ten percent or EUR 10 million, from EUR 100 million in 2017 to EUR 90 million in 2018.'

So their 'stellar' performance in 2018 wasn't only due to their solid business performance but rather thanks to spare parts sales and creative accounting.

https://worldairlinenews.com/2019/03/15 ... %20billion.

FYI Wizz Air just announced a new round of destinations from Vienna, that's how I know.


You could find OS finance in Lufthansa annual report. No need to highlight one year's performance but to my surprise they have record profit for 8 years in a row now, last loss was recorded in 2011. If you remember the record loss around 2008 you could say they did a pretty decent job actually. However the problem since 2012 is low profit margin in comparison with LX/LH, but it's not a question if they can profit or not. Your remarks ‘start operating profitably in the near future or ever’ clearly indicated you didn’t even read their books before talking their profitability. The best profit they had since LH takeover was only 200m (and only once), less than half of what LX could generate most of the years. But mind you LO’s EBIT was just about 50m Euro in good years, and Lauda lost 200m last year while OS turned a surprise profit (I've read Wizz also lost money in VIE but couldn't find exact figure). It's an intense market and VIE doesn't have ZRH's banking industry, OS certainly didn't do well, but it's also not as dreadful as you claim.

P.S. Wizz and most LCC turn to announce new routes repeatedly but forget to mention cuts. It's almost impossible they'd add 6 frames right away after a pandemic to even the LCC capacity OS faced last year.
 
Blerg
Topic Author
Posts: 4261
Joined: Tue Jan 09, 2018 11:42 am

Re: Austrian Airlines to shrink by 20% by 2022

Tue Jun 16, 2020 6:28 am

GLANKG wrote:
Blerg wrote:
The only financial performance I could find was EBIT from 2018, so their financial performance before they paid interests and taxes. That year they managed to record €83 million so I wonder how profitable they would be once they paid all their taxes. On their website their last full financial report is from 2012. From this article, I found this part especially interesting:

'Moreover, a special effect of EUR 40.5 million was reported in 2018, namely the changed accounting treatment for jet engine overhauls. Excluding this effect, the adjusted EBIT would have declined by 55 percent. Earnings before interest and taxes, which also includes book gains from sales of aircraft or aircraft parts, decreased by ten percent or EUR 10 million, from EUR 100 million in 2017 to EUR 90 million in 2018.'

So their 'stellar' performance in 2018 wasn't only due to their solid business performance but rather thanks to spare parts sales and creative accounting.

https://worldairlinenews.com/2019/03/15 ... %20billion.

FYI Wizz Air just announced a new round of destinations from Vienna, that's how I know.


You could find OS finance in Lufthansa annual report. No need to highlight one year's performance but to my surprise they have record profit for 8 years in a row now, last loss was recorded in 2011. If you remember the record loss around 2008 you could say they did a pretty decent job actually. However the problem since 2012 is low profit margin in comparison with LX/LH, but it's not a question if they can profit or not. Your remarks ‘start operating profitably in the near future or ever’ clearly indicated you didn’t even read their books before talking their profitability. The best profit they had since LH takeover was only 200m (and only once), less than half of what LX could generate most of the years. But mind you LO’s EBIT was just about 50m Euro in good years, and Lauda lost 200m last year while OS turned a surprise profit (I've read Wizz also lost money in VIE but couldn't find exact figure). It's an intense market and VIE doesn't have ZRH's banking industry, OS certainly didn't do well, but it's also not as dreadful as you claim.

P.S. Wizz and most LCC turn to announce new routes repeatedly but forget to mention cuts. It's almost impossible they'd add 6 frames right away after a pandemic to even the LCC capacity OS faced last year.


Right, right... everything is fantastic and OS is extremely successful, crushing everything and anything in its way. Regardless of the subsidies or LH refusing to invest in their long-haul product until they become profitable.
 
eurotrader85
Posts: 169
Joined: Wed Oct 24, 2018 8:45 pm

Re: Austrian Airlines to shrink by 20% by 2022

Tue Jun 16, 2020 7:35 am

airhansa wrote:
marcogr12 wrote:
InnsbruckFlyer wrote:

Contrary to my username, I'm not Austrian, but living in Austria has made me realize that Austrians have a blind love for their airline. Everybody absolutely loves OS, and whenever I bring up my opinion that OS should absorb into LH, I'm met with harsh criticism. So while I agree with airhansa, Austrians definitely won't let OS become LH, at least without putting up a fight.


Exactly..Austrians are not Germans and will never accept their airline losing the austrian brand/identity for the sake of pan-european Lufthansa-nized airline.. LH tried to do that with Eurowings in Belgium and failed miserably..Just as Swiss wouldn't accept it either were they in trouble.


Do you think that every single locality needs their own airline? Bavarian Airlines? Andorran Airlines?

Lufthansa may be associated with Germany, but the name is multi-national and derived from the Hanseatic League. If a merger between the airlines went through with a serious advertisement effort showing the links between the Hanseatic League and Lufthansa, then the worries about German branding no longer need to be kept.

From my perspective, there are simply too many airline brands in Europe. LH is the simplest to merge without losing too much brand value (unlike say, KLM-Air France where both brands are very strong, or IAG, where both brands are very weak). Furthermore high speed rail will dent the need for airline travel in Mainland Europe further.


There was another person in history who thought that all German speaking countries should be united under one name and roof-I forget his name. :scratchchin: :scratchchin: :scratchchin: Lufthansa, whether its name is derived from the North German/slight Baltic middle age territory, is Germany’s national airline and no one will ever see it as otherwise. OS and the Austrians would never accept a ‘German takeover’ in their brand, certainly not LX and the Swiss either.

You say both brands in IAG are very weak? Say what you like about the way soft product has gone, but BA’s ‘brand’ is not ‘weak’, shockingly strong given everything, and that group is/was the most profitable out of all you listed. I don’t think there would be many people who would say AF’s brand is as ‘strong’ as you put it either, but sure there might be the odd patriotic Frenchman around and good luck to them if they ever turn a profit.

The way IAG and LH have structured their groups is ideal for their respective companies and is for most airlines. LATAM and Avianca are the only full-service airlines that have one brand for all and look where they are now. LCC have a single brand but they target a different market where value and their brand are perceived differently. IAG and LH keep brands that their local marketing identity is derived from and their respective local customer base value, who are the people who drive most of their revenue. In the commercial world companies tailor different brands to their different customer bases they are targeting.
 
User avatar
Aquila3
Posts: 569
Joined: Sun Nov 14, 2010 3:18 pm

Re: Austrian Airlines to shrink by 20% by 2022

Tue Jun 16, 2020 7:59 am

As a businessman myself, I can say that if you want your business to succeed, I might or might not. If you want your business to fail, or just you are not 100% willing to succeed, you will almost certainly fail.
Now, I am not sure LH wants OS to succeed...
chi vola vale chi vale vola chi non vola è un vile
 
artflyer
Posts: 152
Joined: Thu Jun 06, 2019 4:08 pm

Re: Austrian Airlines to shrink by 20% by 2022

Tue Jun 16, 2020 8:18 am

GLANKG wrote:
Blerg wrote:
The only financial performance I could find was EBIT from 2018, so their financial performance before they paid interests and taxes. That year they managed to record €83 million so I wonder how profitable they would be once they paid all their taxes. On their website their last full financial report is from 2012. From this article, I found this part especially interesting:

'Moreover, a special effect of EUR 40.5 million was reported in 2018, namely the changed accounting treatment for jet engine overhauls. Excluding this effect, the adjusted EBIT would have declined by 55 percent. Earnings before interest and taxes, which also includes book gains from sales of aircraft or aircraft parts, decreased by ten percent or EUR 10 million, from EUR 100 million in 2017 to EUR 90 million in 2018.'

So their 'stellar' performance in 2018 wasn't only due to their solid business performance but rather thanks to spare parts sales and creative accounting.

https://worldairlinenews.com/2019/03/15 ... %20billion.

FYI Wizz Air just announced a new round of destinations from Vienna, that's how I know.


You could find OS finance in Lufthansa annual report. No need to highlight one year's performance but to my surprise they have record profit for 8 years in a row now, last loss was recorded in 2011. If you remember the record loss around 2008 you could say they did a pretty decent job actually. However the problem since 2012 is low profit margin in comparison with LX/LH, but it's not a question if they can profit or not. Your remarks ‘start operating profitably in the near future or ever’ clearly indicated you didn’t even read their books before talking their profitability. The best profit they had since LH takeover was only 200m (and only once), less than half of what LX could generate most of the years. But mind you LO’s EBIT was just about 50m Euro in good years, and Lauda lost 200m last year while OS turned a surprise profit (I've read Wizz also lost money in VIE but couldn't find exact figure). It's an intense market and VIE doesn't have ZRH's banking industry, OS certainly didn't do well, but it's also not as dreadful as you claim.

P.S. Wizz and most LCC turn to announce new routes repeatedly but forget to mention cuts. It's almost impossible they'd add 6 frames right away after a pandemic to even the LCC capacity OS faced last year.


I suggest we stop making comparisons on an apple and oranges basis: EBIT is by far not a good indicator as different airlines finance themselves in different manners. Compare EITDAR, ie EBIT+depreciation/amortisation+rent and you will see how much a given airline earns for its "investors", whether those investors are only equity holders, or also banks or bondholders, or lessors. Otherwise the picture is skewed. And even better compare "EBITDAR to income", so you learn how much of every USD/EUR of income profits those various "investors". In this way you learn how efficient a given airline is.

Example: airline A gets equity capital in the amount of 100 units and acquires ownership of a plane. At the end of the year it makes 10 units EBIT. Airline B gets 20 of equity capital and leases the same plane of the value of 80. So the total investment in airline B is the same, ie 100 units. At the end of the day airline B makes only 5 units EBIT, but it also pays the rent for the lease in the amount of 10 units. Although the EBIT of airline B is smaller, those who invested in total 100 units in airline B got a higher return, which is easly seen when comparing EBITDARs.
 
GLANKG
Posts: 107
Joined: Fri Feb 02, 2018 9:19 am

Re: Austrian Airlines to shrink by 20% by 2022

Tue Jun 16, 2020 8:50 am

artflyer wrote:
GLANKG wrote:
Blerg wrote:
The only financial performance I could find was EBIT from 2018, so their financial performance before they paid interests and taxes. That year they managed to record €83 million so I wonder how profitable they would be once they paid all their taxes. On their website their last full financial report is from 2012. From this article, I found this part especially interesting:

'Moreover, a special effect of EUR 40.5 million was reported in 2018, namely the changed accounting treatment for jet engine overhauls. Excluding this effect, the adjusted EBIT would have declined by 55 percent. Earnings before interest and taxes, which also includes book gains from sales of aircraft or aircraft parts, decreased by ten percent or EUR 10 million, from EUR 100 million in 2017 to EUR 90 million in 2018.'

So their 'stellar' performance in 2018 wasn't only due to their solid business performance but rather thanks to spare parts sales and creative accounting.

https://worldairlinenews.com/2019/03/15 ... %20billion.

FYI Wizz Air just announced a new round of destinations from Vienna, that's how I know.


You could find OS finance in Lufthansa annual report. No need to highlight one year's performance but to my surprise they have record profit for 8 years in a row now, last loss was recorded in 2011. If you remember the record loss around 2008 you could say they did a pretty decent job actually. However the problem since 2012 is low profit margin in comparison with LX/LH, but it's not a question if they can profit or not. Your remarks ‘start operating profitably in the near future or ever’ clearly indicated you didn’t even read their books before talking their profitability. The best profit they had since LH takeover was only 200m (and only once), less than half of what LX could generate most of the years. But mind you LO’s EBIT was just about 50m Euro in good years, and Lauda lost 200m last year while OS turned a surprise profit (I've read Wizz also lost money in VIE but couldn't find exact figure). It's an intense market and VIE doesn't have ZRH's banking industry, OS certainly didn't do well, but it's also not as dreadful as you claim.

P.S. Wizz and most LCC turn to announce new routes repeatedly but forget to mention cuts. It's almost impossible they'd add 6 frames right away after a pandemic to even the LCC capacity OS faced last year.


I suggest we stop making comparisons on an apple and oranges basis: EBIT is by far not a good indicator as different airlines finance themselves in different manners. Compare EITDAR, ie EBIT+depreciation/amortisation+rent and you will see how much a given airline earns for its "investors", whether those investors are only equity holders, or also banks or bondholders, or lessors. Otherwise the picture is skewed. And even better compare "EBITDAR to income", so you learn how much of every USD/EUR of income profits those various "investors". In this way you learn how efficient a given airline is.

Example: airline A gets equity capital in the amount of 100 units and acquires ownership of a plane. At the end of the year it makes 10 units EBIT. Airline B gets 20 of equity capital and leases the same plane of the value of 80. So the total investment in airline B is the same, ie 100 units. At the end of the day airline B makes only 5 units EBIT, but it also pays the rent for the lease in the amount of 10 units. Although the EBIT of airline B is smaller, those who invested in total 100 units in airline B got a higher return, which is easly seen when comparing EBITDARs.


In the case of OS the EBITDAR performs significantly better because most of planes are fully paid out and no new plane for a decade. OS's EBITDA has been positive in healthy margin for 10 years now, averagely 200m per year since 2010.

My point being despite low margin in comparison to LX/LH (and I agree it should do a lot better financially), but OS is NOT a loss making company as some are claiming here.
 
GLANKG
Posts: 107
Joined: Fri Feb 02, 2018 9:19 am

Re: Austrian Airlines to shrink by 20% by 2022

Tue Jun 16, 2020 9:02 am

Blerg wrote:
GLANKG wrote:
Blerg wrote:
The only financial performance I could find was EBIT from 2018, so their financial performance before they paid interests and taxes. That year they managed to record €83 million so I wonder how profitable they would be once they paid all their taxes. On their website their last full financial report is from 2012. From this article, I found this part especially interesting:

'Moreover, a special effect of EUR 40.5 million was reported in 2018, namely the changed accounting treatment for jet engine overhauls. Excluding this effect, the adjusted EBIT would have declined by 55 percent. Earnings before interest and taxes, which also includes book gains from sales of aircraft or aircraft parts, decreased by ten percent or EUR 10 million, from EUR 100 million in 2017 to EUR 90 million in 2018.'

So their 'stellar' performance in 2018 wasn't only due to their solid business performance but rather thanks to spare parts sales and creative accounting.

https://worldairlinenews.com/2019/03/15 ... %20billion.

FYI Wizz Air just announced a new round of destinations from Vienna, that's how I know.


You could find OS finance in Lufthansa annual report. No need to highlight one year's performance but to my surprise they have record profit for 8 years in a row now, last loss was recorded in 2011. If you remember the record loss around 2008 you could say they did a pretty decent job actually. However the problem since 2012 is low profit margin in comparison with LX/LH, but it's not a question if they can profit or not. Your remarks ‘start operating profitably in the near future or ever’ clearly indicated you didn’t even read their books before talking their profitability. The best profit they had since LH takeover was only 200m (and only once), less than half of what LX could generate most of the years. But mind you LO’s EBIT was just about 50m Euro in good years, and Lauda lost 200m last year while OS turned a surprise profit (I've read Wizz also lost money in VIE but couldn't find exact figure). It's an intense market and VIE doesn't have ZRH's banking industry, OS certainly didn't do well, but it's also not as dreadful as you claim.

P.S. Wizz and most LCC turn to announce new routes repeatedly but forget to mention cuts. It's almost impossible they'd add 6 frames right away after a pandemic to even the LCC capacity OS faced last year.


Right, right... everything is fantastic and OS is extremely successful, crushing everything and anything in its way. Regardless of the subsidies or LH refusing to invest in their long-haul product until they become profitable.


If you must be absolute extreme and selective about facts, may I suggest at least get them checked. LHG said OS must improve its margin (to double to about 8 percent of EBIT) to get new long haul planes, this is actually different than what you remembered, they are already profitable, but not enough to justify large capital investment in LHG standard.

https://www.aero.de/news-30275/Austrian ... ieren.html
 
airhansa
Posts: 380
Joined: Wed Jan 08, 2020 3:18 pm

Re: Austrian Airlines to shrink by 20% by 2022

Tue Jun 16, 2020 11:11 am

eurotrader85 wrote:
airhansa wrote:
marcogr12 wrote:

Exactly..Austrians are not Germans and will never accept their airline losing the austrian brand/identity for the sake of pan-european Lufthansa-nized airline.. LH tried to do that with Eurowings in Belgium and failed miserably..Just as Swiss wouldn't accept it either were they in trouble.


Do you think that every single locality needs their own airline? Bavarian Airlines? Andorran Airlines?

Lufthansa may be associated with Germany, but the name is multi-national and derived from the Hanseatic League. If a merger between the airlines went through with a serious advertisement effort showing the links between the Hanseatic League and Lufthansa, then the worries about German branding no longer need to be kept.

From my perspective, there are simply too many airline brands in Europe. LH is the simplest to merge without losing too much brand value (unlike say, KLM-Air France where both brands are very strong, or IAG, where both brands are very weak). Furthermore high speed rail will dent the need for airline travel in Mainland Europe further.


There was another person in history who thought that all German speaking countries should be united under one name and roof-I forget his name. :scratchchin: :scratchchin: :scratchchin: Lufthansa, whether its name is derived from the North German/slight Baltic middle age territory, is Germany’s national airline and no one will ever see it as otherwise. OS and the Austrians would never accept a ‘German takeover’ in their brand, certainly not LX and the Swiss either.

You say both brands in IAG are very weak? Say what you like about the way soft product has gone, but BA’s ‘brand’ is not ‘weak’, shockingly strong given everything, and that group is/was the most profitable out of all you listed. I don’t think there would be many people who would say AF’s brand is as ‘strong’ as you put it either, but sure there might be the odd patriotic Frenchman around and good luck to them if they ever turn a profit.

The way IAG and LH have structured their groups is ideal for their respective companies and is for most airlines. LATAM and Avianca are the only full-service airlines that have one brand for all and look where they are now. LCC have a single brand but they target a different market where value and their brand are perceived differently. IAG and LH keep brands that their local marketing identity is derived from and their respective local customer base value, who are the people who drive most of their revenue. In the commercial world companies tailor different brands to their different customer bases they are targeting.


The New Hanseatic League is a Dutch-led political group containing countries from Sweden to Ireland. I can completely see a merged Lufthansa brand relocating its registered headquarters to the Netherlands for tax purposes.

BA's main profit source is transatlantic flights primarily from London to New York, driven by the fact that both are financial capitals that speak English. This can be serviced by virtually any brand out there and doesn't rely on the British Airways brand name, but rather slot allocations at LHR and JFK. AF's main income source is the fact that most French people can't speak English combined with the fact that France is a major tourist destination - the AF brand has become more associated with France's culture (which is stronger in terms of national identity than the UK). I also agree that it would be good to get rid of the airline, but the brand name is too good to lose.

The market size of Europe cannot support so many airlines - look to the US to see what a stronger market can support. If you don't merge the brands, then the airlines will outright collapse. National airline branding also works against true customer choice and prevents airlines from being forced to build better products.
 
User avatar
Aquila3
Posts: 569
Joined: Sun Nov 14, 2010 3:18 pm

Re: Austrian Airlines to shrink by 20% by 2022

Tue Jun 16, 2020 11:29 am

If you think that Germany will let Lufty move its seat to the Netherland (as FCA has done for the autos) you misunderstood the power ratios in EU. That is not silly Italy. Especially after Germany injected some billions of its taxpayers into it. Not.Going.To.Happen.
chi vola vale chi vale vola chi non vola è un vile
 
User avatar
mercure1
Posts: 4886
Joined: Sun Jul 13, 2008 5:13 am

Re: Austrian Airlines to shrink by 20% by 2022

Tue Jun 23, 2020 6:10 pm

It seems 777 fleet wont be used for some period. Apparently crews were told 767 fleet would cover long haul network that will consist only of Bangkok, Chicago, New York and Washington DC. for the immediate future.
mercure f-wtcc

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos