Austrian Airlines

[the_hawk]

http://www.forbes.com/business/feeds/afx/2006/01/09/afx2437372.html

[Air_madness]

There appears to be some talk about the Austrian Airlines Group planning to withdraw its 777 services to Sydney and Melbourne in the not so distant future.
This surprises me as their Seat Factor is very high and
they have very competitive costs when compared to Qantas and British Airways.
The other competition comes from Emirates and Malaysian.

Additionally it is the fastest way to Europe and they are in fact the cheapest.
If this is a move to reduce their profit loss and the ever increasing fuel prices why are they not raising fares
and delay their business class sleeper seat refurbishment.
Does anyone have some information on whether this rumour is true ?
Maybe Lauda should have remained as he is a successful businessman

[flash8]

Niki is not only a great business man, but a genius. Bring him back.

[high voltage]

I have indeed heard this one myself but cannot not believe it to be true.

[DoNotFeed]

Australia is the only moneymaker in the network and guess what happens to an ailing carrier killing the cashcow.
And Niki - signed all the contracts and payment terms of the past, taking the copany to the r+++s, actually three times.:ok:

[international hog driver]

I have used Lauda (always will be to me) many times between Europe and Aus and its always good. If it is being killed of it must be in some kind of Star Alliance deal between SQ, LH and AU.

I only say this because sometimes up to half of the Aus bound pax are transfers from numerous AU & LH feeds in to VIE on LH ticket stock.:hmm:

This being the case I very much doubt the rumour:=

[172driver]

Well, FWIW, they have done it in the past. Axed the highly profitable Joburg / Capetown route for no apparent reason at some point back in the 90s.... :ugh:

[Dani]

...as their Seat Factor is very high and they have very competitive costs ...

With costs you mean ticket prices?
How would you know the costs they have?

Of course they cannot fill up their 777 that's why their tickets are cheap, that's why they make no money, that's why they stop the service. There is no home market from VIE to fill up an aircraft to Australia.

Dani

[Lucifer]

This surprises me as their Seat Factor is very high and
they have very competitive costs when compared to Qantas and British Airways.
Duh - low yield = lossmaking!

Bums on seats does not mean the thing makes money!

[Taildragger67]

B:mad: y hope not - booked to go home for Christmas!

[international hog driver]

Dani is right there is no real home market….. However AU filled the gap left by—

JAT that used to be a DC-10 to Aus
Olympic that was A340
LH that was 747 then 767
AZ that was 747 as well

You would be surprised how many people form these nations feed the AU 777. As to yield, that’s not my bag baby but the are definitely profitable on this selected route by the numbers I have seen.

Maybe Mr172 has come closer to the mark, AU have made some strange decisions in the past.

[Taildragger67]

SQ, EK and CX don't have much of a 'home' market (discounting mainland China in the case of CX) but they seem to all do ok on the Europe-Australia run.

It's a pretty easy connection in Vienna - flight from London rolls up and the tripler for Sydney - if not at the very next gate - isn't far away, given the little round satellite terminals at VIE.

[Andy_S]

SQ, EK and CX don't have much of a 'home' market (discounting mainland China in the case of CX) but they seem to all do ok on the Europe-Australia run.
But they're not really serving their home market, are they? They're carrying transfer passengers through their respective en-route hubs. Cities which are a) convenient intermediate stops, and b) pleasant places to break your journey for a few days.
It's a pretty easy connection in Vienna - flight from London rolls up and the tripler for Sydney - if not at the very next gate - isn't far away
Why would anyone want to do that, given the other options from London?

[The SSK]

As mentioned, Lufthansa and Alitalia have pulled out of the market, as has KLM. And Air France? I guess they flew there after they took over UTA. Plus Olympic and JAT.

That leaves only BA, Virgin and, er, Austrian as the only Europeans still flying to Australia. Doesn't that tell you something about the viability of the market?

[Taildragger67]

But they're not really serving their home market, are they? They're carrying transfer passengers through their respective en-route hubs. Cities which are a) convenient intermediate stops, and b) pleasant places to break your journey for a few days.
Why would anyone want to do that, given the other options from London?

a) DUBAI a pleasant place to break your journey? Only if you're a chav. Gimme Vienna any time. Cheaper beer for a start.

b) Coz they're usually CHEAPER than the other options mentioned, but without sacrificing as much time as the likes of MU, JL, KE, etc. with the Asian airport night-stop (but not as good as MH when they're having a special!). Example - for Sydney to London, the difference between the OE via Vienna and, say, Sing Air is about two hours. And the tube's less packed after the 9am arrival anyway! :ok:

[Liftdumper]

Austrian is going to receive the fourth 777 in the near future. I have some sources telling me that the 777's are going to fly JFK, Montreal and Tokyo as from the next winterschedule.

Bye bye Sydney, bye bye Melbourne.
As someone wrote before, full aircraft don't say anything on profitability of a route.

It's a pity, but reality.

[Andy_S]

Coz they're usually CHEAPER than the other options mentioned

Austrian cheaper than MH, TG, CX, SQ? If they are, then it would explain why their planes are full but they're losing money on the SYD route.

[international hog driver]

All the European airlines have felt yield pressure from the Asian and select few Middle East airlines between Europe and Oz.:\

It was not really the fact that they were losing money, most in fact were in the black (a least a little bit) however when faced with the fact that they could double the "sector" utilisation and increase profitability on other routes without tying up an airframe for 48hrs return journey. There’s the answer.:hmm:

I certainly hope that JFK, Montreal and Tokyo are not replacements for the Syd 777 services but with one more T7 coming and the 342's gone I can only surmise that this will be the case.:{

There is money to be made in this kind of system but you need, retail distribution and route frequency to maintain both services levels and consequently passenger yield.:ugh:

[Taildragger67]

Anyone heard anything further on this topic?

[DoNotFeed]

The status of rumor has now changed to reality.

all down under stops at 03.07.:yuk:

[Taildragger67]

Indeed it's official - no more OS in YSSY or YMML from March. This quote from the Austrian corporate website, quoting the CEO:

"Qualitative growth in our network, particularly against the background of the high kerosene prices, demands consistent optimisation of the route portfolio, which leads to the suspension of individual, and consequently low-yield, routes. Subject to these points of view, we have decided to suspend our Australian routes to Sydney and Melbourne from end-March 2007. We are currently looking into alternative long-haul destinations that correspond to our strategic orientation and provide adequate contributions to our overall European route network."

[maxmobil]

Niki is not only a great business man, but a genius. Bring him back.

Oh Lord, please no.. ;-)

Located in Canada You might not be up-to-date about the facts WHY and HOW Niki the Genius escaped from bankruptcy twice - only through his connections, bonus of his triple-Formula One Championship titles. Austrian is still fighting hard to cope with the debts it had to take over from Lauda due to political reasons (Nikis friend Mr. Streicher, former Ministry of transport being the Head of the Board of Supervisors at Austrian Airlines..), his ordering of 4 B777 when not needed is just one part of the big picture.

The route to Australia WAS successful years ago, but not anymore.

BTW, the brand "Lauda Air" will be history within one year by a probability of 95%.

[the_hawk]

from Dec 11th, two times a week, to Erbil in northern Iraq

[wobble2plank]

In the Austrian sunday papers an article details the continuing woes of Austrian Airlines.

In takeover talks Lufthansa has offered a 'bid' of 1 euro for the struggling carrier which currently is loosing 150 million euros a year with a debt to the state owned holding company of 900 million euros.

Drastic restructuring leading to a possible loss of 40 older LH aircraft and a quarter of the staff including 400 pilot jobs could be on the cards. Leaving the airline with 60 aircraft, mostly SH and 700 pilots.

If LH buy the carrier they will see the restructuring through with a 'sweetner' from the state to assist in the redundancy package programme. The final intention would be a slimmer Austrian Airlines complementing the LH route structure with the possible integration of 'Niki' low cost SH at a later stage.


Ouch, thoughts go out to all those who might lose jobs over this one. Seemed to come a little out of the blue! First of many perhaps?

1 euro plus a backhander to take over 150 million losses per year and 900 million euro debt. Seems LH are on a march somewhere!

[squeaker]

Not Poland?

[brakedwell]

How about the Midlands of Britain?

[wobble2plank]

Not Poland?

I heard they tried that once with older liveried aircraft but they didn't like the LOT crew food.

:}:E

[hawkeye]

As an aside, exposure of Austrian banks to emerging market economies in Eastern Europe is 85% of Austrian GDP. Since those Eastern European economies are now in freefall does Anschluss loom again.

[RoyHudd]

The Euro press is full of rumours about the short-term viability of Austrian Airlines. Are they in dire need of privatisation or is this a smoke-screen to enable LH to acquire another good but fiscally-troubled airline for peanuts? OS always seemed a survivor to me, but then so did SR.:hmm:

[Rollingthunder]

VIENNA (AFP) — Austrian Airlines will be sold to German carrier Lufthansa, the Austrian state holding company OeIAG, which has a 41.6-percent stake in the loss-making airline, announced Thursday evening.

"As of now, OeIAG will only hold concluding talks with Lufthansa," it said in a statement after a meeting of its privatisation committee.

Rival suitors "(Russia's) S7 and Air France-KLM are no longer in the bidding process," it added.

[ZeeDoktor]

It would appear that Austrian has a history of repeating Swissair-isms: From growth-by-accumulation-of-crap-carriers to missing out on good collaborations. Lauda was in a way what Crossair was to Swissair, only they swallowed them before it happened the other way round. It doesn't surprise me that those at the economic helm are not entirely successful in their efforts.

Lufthansa seems to have found a way to keep things going profitably even in times of turmoil. Why complain, it did good for the new Swiss, at least they are still flying...

[wobble2plank]

Perhaps the proposed 1 euro price of Austrian Arrows has something to do with the buyout?

LH are prickly about the lack of state aid being given for the restructuring of the airline and the proposed 40% cut in workforce and the associated redundancy costs.

Unfortunately for LH the Arrows come with a hefty Euro 900 million debt and a loss, at current operating margin, of 150 million a year.

Should keep the accountants busy.

[chuks]

DeutscheWelle, the German equivalent of the BBC Overseas Service, just said that the Austrian government is debating debt forgiveness for Austrian. 900 million euros is a lot of debt, eh?

That will probably unleash some sort of debate in Brussels over whether that is allowed or not under the rules against subsidies. On the other hand, LH must have some sort of deal in place to avoid having an albatross hung around their necks. Not just debt forgiveness but being able to cut some of the staff must be on the cards, when that is such a political hot potato.

It's a real mess to see the European social safety net tangle the American de-regulation model, not that either one is the be-all and end-all.

It reminds me of some old buffer arguing that Africans were better under colonialism to read opinions that the airlines were better off under regualation but there is some truth to both these arguments. You have to wonder if the politicians are just following an ideology without thinking about practical consequences but in both cases there's no putting the genie back in the bottle now.

I feel that I might be better off never having pursued that airline career very far, the way things are going. Good luck to the guys caught in the mill.