• “Plan B” to be implemented
• Joint flight operations by Austrian Airlines and Tyrolean
• Programme aims to create competitive framework conditions to return company to profit
The Austrian Airlines Executive Board introduced the operations transfer to Tyrolean last night. This means all flight operations of Austrian Airlines will be pooled at its subsidiary Tyrolean Airways as of 1st July 2012. The step is a key component of the ongoing restructuring programme, worth between 220 and 260 million euros to the company. The programme aims to modernise Austrian’s framework conditions in such a way that the country’s largest domestic airline can be steered back into the profit zone.
The transfer of flight operations will change nothing for the customer: Austrian Airlines will remain Austrian Airlines, with its fleet of 80 aircraft serving 130 destinations around the world. For the employees of Austrian Airlines Flight Operations, which consists of 600 pilots and 1,500 flight attendants, nothing will change in terms of their workplace or salary.
Joint flight operations by Austrian Airlines and Tyrolean
In a next step, Austrian Flight Operations is to be integrated with its counterpart at Tyrolean. A project organisation consisting of experts and managers from both companies has already been formed to carry out the integration work. The aim of the working groups is to organise joint flight operations without any duplication of efforts by the end of this year. Both the Vienna and Innsbruck locations will form part of the future concept in all cases.
Difficult environment: fuel prices rising, ticket prices falling
According to statisticians Statistik Austria, ticket prices for air traffic within Europe have fallen by 50 percent between 2006 and 2011 alone. In the same period, the fuel price has doubled, and continues to rise.
Chronology of decisions since 9th January 2012
On 9th January 2012, the Executive Board, under the leadership of CEO Jaan Albrecht, announced its Work Programme. This was based on the concept that all stakeholders should make a contribution to the restructuring of Austrian Airlines. On 16th January 2012, the Supervisory Board gave the Work Programme the go-ahead. The Chancellor, Vice-Chancellor and relevant ministries were informed of the restructuring project, while the names of Vienna Airport, AustroControl and some 60 suppliers were added to the list of stakeholders. After weeks of futile efforts by management to invite the works councils and unions to meetings for talks, the first date for negotiations was eventually only set for 15th February 2012. This was then called off by the union after just 11 minutes. Since the Executive Board was unable to recognise any willingness on the part of unions to find a joint solution at the negotiating table, it terminated the Austrian Airlines Inflight Collective Agreement. On 13th March 2012, the Supervisory Board signed off an alternative plan: to transfer flight operations to the subsidiary Tyrolean, concentrating the company’s entire flight operations within a single airline. On 15th March 2012, the Supervisory Board of Lufthansa resolved to provide a conditional capital injection of up to 140 million euros. On 23rd March 2012, the union vida terminated the collective agreement of Tyrolean Airways, against the will of Tyrolean’s employees. The termination follows a protest meeting organised by Tyrolean employees against the union. On 24th April 2012, contrary to expectations, the Executive Board and works council of the flying staff arrived at an agreement in principle. This agreement was still supposed to be put to a vote amongst staff by 30th April 2012. The works council of the flying staff did not put it to a vote, however, as a result of which the Executive Board decided to press ahead with the operations transfer.
An overview of the Work Programme:
• Staffing: it proved possible to reach agreement with the works council of the ground staff and the GPA union in the “Modernisation of Collective Agreements” work package. Part of this agreement called for a zero-increase wage round for 2013 and an understanding over withdrawal from the existing pension fund model. Intensive talks were held with the works council of the flying staff until the very last minute, but these regrettably failed to achieve an agreement. The transfer of operations to the Tyrolean subsidiary is now being implemented as a result. The costs level of Tyrolean gives Austrian Airlines a forward-looking and competitive basis for its further development.
• Route network and fleet harmonisation: a new flight schedule has been developed with a strategic orientation to our domestic market of Austria and strong eastern markets. The removal of eleven medium-haul aircraft of the type Boeing 737 from the fleet and acquisition of seven Airbus A320 is underway. The retraining of pilots began back in March. This is being flexibly adjusted, depending upon the time of the successive fleet harmonisation. The “retraining pool” consists of pilots trained on the Boeing 737 and co-pilots from the Fokker fleet.
• Location: an agreement has been reached with Vienna Airport to secure the common future of the two organisations, and it has been agreed that both transfer and long-haul traffic should be built up. The new Austrian Star Alliance Terminal, which will go into operation in June 2012, provides a strong basis for doing this. In the field of handling, too, savings potentials have been identified, and framework conditions defined for a long-term agreement.
• Costs & revenues: many business partners and suppliers want to take part in the future concept of Austrian Airlines, and have given their support to this by adjusting their conditions. Extensions to contracts and cheaper purchasing conditions have made it possible to save substantial amounts, running into millions of euros, with more than 60 suppliers. The revenues side consists of a number of measures including the expansion of corporate client business via alliance and Star Alliance partners, which are currently being implemented.
Austrian Airlines is Austria’s largest carrier and operates a global route network of round 130 destinations. That route network is particularly dense in Central and Eastern Europe: with 44 destinations, Austrian Airlines operates the densest route network into this region served by a single airport. Thanks to its favourable geographical location at the heart of Europe, the company’s hub at Vienna International Airport is the ideal gateway between East and West. Austrian Airlines is part of the Lufthansa Group, Europe’s largest airline group, and a member of the Star Alliance, the first global alliance of international airlines.
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