Restructuring long-haul product key to Austrian's recovery
Monday January 25, 2010
Austrian Airlines, now a Lufthansa subsidiary, remains burdened by a long-haul product that has lost money every year since its 1989 launch and faces a critical 2010, during which it must make significant progress on its restructuring, CCO and executive board member Andreas Bierwirth said last week.
"2010 will be a year of destiny for our company," he told ATWOnline. Austrian's long-haul network includes Tokyo Narita, Beijing, Male, Delhi, Bangkok, New York JFK, Washington Dulles, Toronto and Punta Cana. But Vienna has not proven to be a hub that can sustain traffic even to that limited collection of destinations, and Bierwirth admitted that offering excellent onboard service will not be enough to entice passengers to fly through VIE. "We have to find reasons" that customers should choose OS, he said. "It is also not optimum for us to operate two types of long-haul aircraft, six 767-300ERs and four 777-200ERs."
Austrian still believes it is possible to create a profitable long-haul product that is aligned with its European and Middle Eastern network. "Our long-haul operation still has a place in the company," COO and executive board member Peter Malanik said. An important improvement will be to adjust departure times so that passengers within Lufthansa Group can choose from among several flights. "Currently, all member carriers leave Beijing during lunch or in the afternoon. When OS offers flights in the evening, we will be more attractive," Bierwirth said.
Ticket sales through LH's global network also should improve OS's long-haul loads. If progress is made by the autumn, it will decide whether to replace two 767s with two 777s.
Malanik and Bierwirth said the restructuring is progressing as planned. "The volume of passengers in terms of pre-bookings for the summer season is improving," Malanik revealed. OS expects double-digit passenger growth on its continental network this year and plans to continue replacing regional jets with 737NGs on European routes. "However, yields remain low. Our business travelers are not returning to business class," Bierwirth warned. Still, OS is targeting positive operational cash flow across it European network this summer.
by Kurt Hofmann
