Austrian Airlines Achieves Considerable Improvement in Operating Results

Published on : Tuesday, August 2, 2016

Austrian AirlinesAustrian Airlines concluded the first half of 2016 with a considerable improvement in its operating results. Earnings before interest and taxes (EBIT) amounted to EUR 2.0 million in the first six months of 2016, comprising a rise of EUR 19 million from the previous year. Adjusted EBIT, the indicator relevant for the company’s earnings forecast which also includes book gains from aircraft sales, climbed by EUR 17 million in the first half of 2016 to minus EUR 0.1 million. In particular, the improvement in the airline’s performance can be attributed to lower jet fuel and technical costs as well as the positive one-off effect related to the conclusion of a long-term lease agreement with Vienna Airport. This represents a positive delayed effect from the airline’s restructuring efforts. Moreover, the expansion of bilateral flight traffic between Germany and Austria also had a positive impact in the first half of 2016.

“Our satisfaction with the improvement of our business results is rather restrained at the present time,” says Austrian Airlines CFO Heinz Lachinger. “We continue to expect an increase in the adjusted EBIT compared to the entire year 2015. However, against the backdrop of a difficult political and economic market environment as well as multiple terrorist attacks in Europe within the past weeks, the improvement will not be as pronounced as we anticipated several months ago.” In 2015, Austrian Airlines reported an adjusted EBIT of EUR 52 million. Airlines traditionally generate the biggest portion of their earnings in the third quarter of the year.

Overview of key figures
Total operating revenues in the first half of 2016 rose by 2.9 percent or EUR 30 million to EUR 1,060 million (H1 2015: EUR 1,030 million). Operating expenditures were up by 1.0 percent to EUR 1,058 million (H1 2015: EUR 1,047 million), which is mainly due to higher personnel and training expenses in connection with the integration of the Embraer fleet as well as the strong US dollar. Accordingly, EBIT amounted to EUR 2.0 million as at June 30, 2016 (H1 2015: minus EUR 17.1 million). After deducting proceeds from the sale of Fokker aircraft in its fleet and other depreciation, amortization and impairments, adjusted EBIT amounted to minus EUR 0.1 million in the first half of 2016 (H1 2015: minus EUR 17.2 million). The second quarter of 2016 showed a positive adjusted EBIT of EUR 29 million. However, this was EUR 7 million lower the comparable figure of EUR 36 million in the second quarter of 2015.

Intercontinental network adjustments well underway, European business under pressure
Austrian Airlines has been operating flights to Shanghai, China since the first half of the year. In turn, the less profitable flight service to Delhi was terminated. A code share agreement was concluded with Air India, which now connects Vienna with the Indian capital. Moreover, Austrian Airlines will remove Tokyo from its route network starting in September 2016 but offer flights to Hong Kong and Cuba. With these measures, Austrian Airlines expects to have a more balanced long-haul network as well as improvements in route results. Conversely, the long-haul network to North American destinations is currently serving as a counterweight to this strategy, in light of the fact that travel advisories regarding the European security situation issued by the American government are negatively impacting route performance.

In contrast, bilateral flight traffic of Austria’s national carrier with Germany has developed gratifyingly. Since this year, Austrian Airlines has been offering, amongst other destinations, direct flight connections from Innsbruck, Graz and Salzburg to Frankfurt via its own route network.

110,000 more passengers in the first half-year
Close to 5.1 million passengers flew with Austrian Airlines in the first six months of the year, a rise of 2.2 percent or 110,000 people compared to the prior-year period. The flight offering measured in available seat kilometers (ASK) was increased by 3.7 percent, which is mainly attributable to the expansion of bilateral flight traffic between Germany and Austria. Capacity utilization (passenger load factor) fell by 1.8 percentage points to 73.2 percent.

The total staff of the Austrian Airlines Group including its fully consolidated subsidiaries amounted to 6,223 employees as at June 30, 2016, comprising a year-on-year rise of three percent (June 30, 2015: 6,019 employees). The increase is related to the hiring of pilots and flight attendants.

Austrian Airlines reported a deterioration of its regularity of operation and punctuality compared to the previous year. The punctuality rate on departure was 88.1 percent (H1 2015: 90.1 percent), whereas the punctuality on arrival equaled 87.1 percent (H1 2015: 89.2 percent). The regularity of operation was 98.4 percent (H1 2015: 99.0 percent). The number of flights operated by Austrian Airlines rose by six percent to 65,103, comprising a daily average of 358 flights.

However, Austrian Airlines was in the top ranks with respect to service quality at the renowned Skytrax World Airline Awards 2016. In particular, the service provided by Austrian Airlines on the ground and in the air was honored with the “Best Airline Staff in Europe” award for the third straight year. After all, Austrian Airlines is rated as 19th in the overall global rankings of the world’s best airlines (2015: 13th).

 

Source: Austrian Airlines

 

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