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Annual results for 2014: Austrian Airlines Achieves Operating Result of EUR 10 Million

Finance Results

• Cost reduction program has a positive impact, profitable operations for the second straight year despite non-recurring effects
• CEO Jaan Albrecht: “We are well on track”

The resolute restructuring program of the Austrian Airlines Group is clearly reflected in its business results for the year 2014: Austrian Airlines succeeded in generating an operating profit of EUR 10 million (2013: EUR 25 million). Taking into account the non-recurring effects related to provisions allocated for special severance payments as part of the new collective wage agreement for the flight crew, earnings would be significantly higher than in the previous year. The earnings situation of the airline in 2014 was also negatively impacted by the crises in the Middle East, Russia and the Ukraine. Following 2007, the year 2014 marks the second straight year in which Austrian Airlines is in the black.

“We are satisfied with our business results. We are well on track despite headwinds from Eastern Europe and non-recurring effects”, says Jaan Albrecht, Chief Executive Officer of Austrian Airlines.

Business results in detail:
As a consequence of stringent cost management measures, operating expenditures fell by close to one percent or EUR 19 million, from EUR 2,173 million to EUR 2,154 million. At the same time, total operating revenues were down by 1.5 percent to EUR 2,164 million from the prior-year level of EUR 2,198 million. This is related to the decline in average yields and the targeted reduction in the flight offering as a consequence of various geopolitical crises in the Ukraine, Russia and the Middle East.

Accordingly, Austrian Airlines generated an operating profit of EUR 10 million in 2014 in spite of political crises and non-recurring effects. This comprises a drop of EUR 15 million from the previous year. This decrease can be attributed to non-recurring effects related to the special severance payments required within the context of the new collective wage agreement for the flight staff.

Following a new and intensive round of negotiations, the management and Works Council of Tyrolean Airways reached a consensus at the beginning of October 2014 concerning the cornerstones of a new collective wage agreement. On October 31, 2014, the new Group collective wage agreement was signed by the Austrian Federal Economic Chamber as the employer representative and the trade union as the employee representative. The agreement, which took effect on December 1, 2014, applies to about 3,000 pilots and flight attendants. A key aspect of the negotiated solution is the transfer of all flight attendants and pilots to Austrian Airlines, which is planned to take place on March 31, 2015. Moreover, the agreement stipulates severance payments and legal certainty for the individual employees. As a result of the agreement, the pending lawsuits of the trade union and the Works Council for the flight and cabin crew relating to the legality of the transfer of flight operations in 2012 and the after-effects of the former collective wage agreement for flight personnel have been withdrawn. On the basis of the new collective wage agreement, Austrian Airlines has achieved an important milestone in improving the competitiveness of the company.

“The restructuring implemented in recent years has made us more competitive, improving our capital structure and strengthening our liquidity base. Austrian Airlines is once again capable of making new investments“, states Chief Financial Officer Heinz Lachinger.

Stable passenger figures and reliable operations

With respect to its operational business, Austrian Airlines carried close to 11.2 million passengers, a drop of 1.0 percent from 2013. Capacity expressed in available seat kilometers was increased by 3.6 percent. Capacity utilization (passenger load factor) improved to 78.9 percent, a rise of 0.3 percentage points from the previous year.

In 2014, Austrian Airlines operated a total of 126,953 flights using 75 aircraft, or about 350 flights per day. The regularity of operation was 98.8 percent, whereas the punctuality rate on departure equaled 89.9 percent. Accordingly, Austria’s national carrier is the third most punctual airline in the world.

More passengers expected once again in 2015 – Long-haul network is being expanded

In 2015 Austrian Airlines will continue to focus on expanding its long-haul routes and on tourist destinations. Starting on October 16, 2015, Austrian Airlines will fly five times per week to Miami, its sixth destination in North America in addition to New York, Newark, Washington, Chicago and Toronto in Canada. Flight service to Miami will be offered throughout the entire year. Besides, direct flights to Mauritius will be added to the flight schedule as of October 29, 2015. Austrian Airlines expects a considerable rise in passenger volume as a result of these measures.

Another positive development is the expansion of the Austrian Airlines fleet by a total of four Bombardier Dash 8-Q400 turboprops. Two of these aircraft have been deployed in regional flight traffic on behalf of SWISS since November 1, 2014 on the basis of a wet lease agreement. Austrian Airlines also aims to generate additional business with this move. “We have earned a good reputation as an operating carrier within the Lufthansa Group”, adds CEO Jaan Albrecht. “We fly for SWISS, Lufthansa and Brussels Airlines, and also for Eurowings starting in the winter of 2015. This gives us the possibility to enhance our competence above and beyond our core business.”

The total staff of the Austrian Airlines Group amounted to 6,067 employees at the balance sheet date of December 31, 2014 (December 31, 2013: 6,208 employees). The number of employees is expected to rise slightly again in 2015. Austrian Airlines is recruiting about 100 pilots, flight attendants and airport station staff. The new positions are related to the new destination of Miami and the flights operated on behalf of Eurowings.

Positive outlook for 2015
“The year 2015 will remain challenging in the light of the current trouble spots. However, I believe Austrian Airlines has emerged as a stronger company as a consequence of the restructuring program. For this reason, I expect a further perceptible increase in the operating results“, concludes CEO Jaan Albrecht.
  
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Austrian Airlines
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 39 destinations. 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. The flight operations of the Austrian Airlines Group have been bundled at its 100% subsidiary Tyrolean Airways since 1st July, 2012.

Owner. Editor. Reproducer: Austrian Airlines AG. Corporate Communications public.relations@austrian.com. Please find further information concerning the disclosure according to §§ 24 and 25 Media Act on www.austrian.com