Lufthansa Group to take cost-cutting measures with Austrian Airlines

Austrian Airlines facing ‘mother of all battles’ against low-cost carriers in Vienna, cuts 800 jobs


VIENNA - The Lufthansa Group will cut up to 800 jobs at Austrian Airlines and centralise its operations solely from its Vienna hub in an effort to trim 90 million euros (US$99.2 million) in costs from the carrier by the end of 2021.

In the group's third-quarter earnings call, CEO Carsten Spohr said that Austrian is facing "the mother of all battles" against low-cost carriers in Vienna. Besides the personnel cuts, which executives said largely would come from not filling vacated positions, the group also is standardising Austrian's fleet by replacing all Bombardier Dash 7 Q400s with Airbus A320s by 2021.

In addition, the group is also standardising Brussels Airlines' fleet and realigning its network, and it is downsizing aircraft in its cargo unit.

"In an increasingly challenging market environment, it is more vital than ever that we consistently take every action within our influence and further reduce our costs," according to CFO Ulrik Svensson.

"We expect all group companies to make their contribution here."

Lufthansa Group's revenues were up 2% year over year to 10.2 billion euros during the third quarter. Traffic was up 3%, and capacity increased 2%; load factor was up 0.5 percentage points to 86.3%.

While the group said business on North Atlantic routes has been strong, it is facing "continued pricing pressures in Europe" and a general global economic slowdown. As such, it is planning limited growth for its 2019-2020 winter schedule and is cutting capacity for Eurowings.

The group reported a net profit of 1.2 billion euros in the quarter, up from 1.1 billion euros in the third quarter of 2018.

SOURCE: Business Travel News

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