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Published on : Wednesday, November 2, 2016
Austrian Airlines, Austria’s flag carrier, generated earnings before interest and taxes (EBIT) of EUR 84 million in the first nine months of the current 2016 financial year. This comprises a year-on-year increase of 38% from EUR 61 million in 2015. Adjusted EBIT, the indicator relevant for the company’s earnings forecast which also includes book gains from aircraft sales amongst other factors, rose 30% or EUR 18 million to EUR 79 million in the first three quarters of 2016. In particular, the improvements in the airline’s performance can be attributed to lower jet fuel costs as well as a positive one-off effect related to the conclusion of a long-term lease agreement with Vienna International Airport.
This represents a positive delayed effect from the airline’s restructuring efforts. Furthermore, the expansion of bilateral flight traffic between Germany and Austria also had a positive impact on business: In the first nine months of 2016, Austrian Airlines transported a quarter of a million more passengers than in the previous year.
“It has been a while since Austrian Airlines was able to present comparably good results”, says Austrian Airlines CFO Heinz Lachinger. “However, this should not obscure the fact that there is still work on the cost- and earnings side ahead of us. For the planned investments in our fleet and product offering we have to continue to work on our cost- and earnings structure”, he states. Austrian Airlines will expand its fleet by two Airbus A320 aircraft before the end of the year, followed by a sixth B777 in 2018. This is complemented by the intended acquisition of up to five wet lease aircraft from Air Berlin.
Overview of key figures
Total operating expenditures were up slightly in the first nine months of 2016, rising by only 1% or EUR 21 million to EUR 1,665 million (Q1-3 2015: EUR 1,644 million) in spite of considerably higher fees and personnel expenses. Total operating revenues in the same period increased by 3% or EUR 43 million to EUR 1,748 million (Q1-3 2015: EUR 1,705 million). The main reason for this development was the expansion of bilateral flight traffic to Germany. As a consequence, earnings before interest and taxes (EBIT) amounted to EUR 84 million, comprising a rise of 38% or EUR 23 million from the prior-year period. After deducting proceeds from the sale of the airline’s Fokker aircraft, adjusted EBIT totaled EUR 79 million (Q1-3 2015: EUR 61 million). Revenue in the first three quarters of 2016 amounted to EUR 1,637 million, up 3% from the comparable figure as of September 30, 2015.
The quarterly period encompassing the summer months has traditionally been a key driver of earnings for Austrian Airlines. Third-quarter revenue was up 4% compared to the summer quarter of 2015. EBIT climbed to EUR 82 million from the prior-year figure of EUR 78 million, and adjusted EBIT totaled EUR 80 million (refer to the chart on page 3 for more detailed information).
Austrian Airlines carried about 8.6 million passengers in the period January to September 2016, representing an increase of 3% or 266,000 people. This rise can be attributed to expanded bilateral German-Austrian flight traffic. The flight offering (capacity) as measured in available seat kilometers (ASK) climbed 4%. However, on an accumulated basis since the beginning of the year, capacity utilization (passenger load factor) fell by 1.8 percentage points to 77%.
The Austrian Airlines punctuality rate on departure equaled 87.2%, a drop of 1.6% in a year-on-year comparison but still above the average. The regularity of operation was 98.5%. There was a shortage of available flight crews this past summer due to preparations and, above all, the extensive training measures relating to the integration of 17 Embraer jets in the airline’s fleet. In turn, this negatively impacted the regularity of flight operations. Austrian Airlines responded by leasing external capacities, revising its training program and increasing the hiring of pilots, enabling the airline to achieve a stabilization of operations for the most part. The recruitment of additional cockpit personnel is clearly reflected in the increased number of employees.