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Austrian Airlines Announces Major Realignment Amid Competition From a “Glut” of Low-Cost Carriers

Updated: Jan 11, 2020

Austrian Airlines announced Thursday that they would realign their operations in order to better compete with the influx of budget carriers at their Vienna hub. As part of the Airline’s “PE20” cost savings program, around 700-800 jobs will be cut.

Austrian Boeing 777 - Courtesy Austrian Airlines

Lufthansa Group subsidiary Austrian Airlines announced a major realignment today to compete with a “glut” of budget carriers invading their home turf in Vienna. The cost savings initiative called “PE20” will result in between 700-800 job cuts, saving the airline €90M annually by 2021. Effective immediately, Austrian’s unprofitable long-haul service to Miami will be cut with the last flight arriving in Vienna Friday. Weekly summer season flights from Vienna to Los Angeles will be cut from seven to five flights weekly in 2020. In today’s announcement, Austrian Airlines CEO, Alexis von Hoensbroech stated,

“We have to reposition ourselves in order to survive the brutal competition of the low-cost airlines. In part, the measures will be painful because they drain resources which we tediously built up over the past years. However, at the same time they are necessary in order to safeguard the future of Austrian Airlines as the leading airline in Austria. We will not retreat a single millimeter on the Viennese market."

Austrian Airlines has been profitable over the last six years but is facing potential losses moving forward due to the brutal fare war raging in Vienna. The airline is standing up to the competition by bundling its fleet in the nation’s capital and turning over some regional routes from Austria to Germany to Lufthansa. For example, this December the Salzburg-Frankfurt route will be converted from an Austrian (OS) flight number to Lufthansa (LH). Austrian’s regional crew bases in the federal provinces will be closed and employees will be offered transfers to Vienna.

Another important part of Austrian’s realignment strategy is to upgrade and harmonize their fleet. The company is already in the process of replacing 18 turboprops with ten far more productive Airbus A320s. Austrian also plans on working closer with their Lufthansa Group “sister company” Eurowings. In January 2020, Eurowings will begin to operate four wet-leased aircraft on behalf of Austrian, thereby extending Austrian’s routes to Barcelona, Birmingham, Nuremberg, Rome and Zadar. Austrian Airlines expects to generate additional savings through centralization, automation, digitization and cutbacks in non-staff expenses. The company’s overarching goal is to be able to finance their fleet renewal and other investments through improved operational efficiencies internally. In other words, the airline will stand on its own to achieve sustained profitability and become an “investment-ready” airline.

Source: Austrian Airlines


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