CEO of Austrian Airlines: “The crisis does not allow a sigh of relief” – Vindobona.org
The airline industry has been particularly affected by the COVID-19 pandemic.Travel restrictions combined with travel fears have resulted in a massive decline in tourism and air travel in general. The International Civil Aviation Organization estimates that there was a loss of approximately $ 371 billion in gross passenger operating revenue from airlines in 2020.
Austrian Airlines was not immune from this crisis and suffered significant losses in 2020. According to a report, 2021 was better than 2020 for the airline, but it is still suffering from the ongoing pandemic.
The COVID-19 pandemic continues to have a severe effect on Austrian Airlines’ business results. At the end of the second quarter of 2021, the airline was only able to offer around 55% of its pre-crisis capacity and therefore generated adjusted profit before interest and taxes (adjusted EBIT) of -95 millions of euros. Adjusted EBIT for the first half of the year amounted to -201 million euros compared to -235 million euros for the same period of the previous year (+ 14%). Compared to the first half of 2020, when the pandemic was in its infancy, the number of passengers fell by 44% to just under 1.1 million, compared to 2019, this represents a decrease of 83%.
“Virus variants, the travel restrictions often associated with them, and low demand for long-haul and business travel are clearly slowing the recovery of the aviation industry. The increasing number of bookings in the summer gives us a bit of a break, but the crisis does not allow us to breathe a sigh of relief, ”said Alexis von Hoensbroech, CEO of Austrian Airlines, of the company’s figures for the first half of 2021.
In the second quarter of 2021, Austrian Airlines’ turnover was 126 million euros, 260% more than in the same quarter of the previous year, which was limited to practically only two weeks of minimum operation in June (Q2 2020: 35 million euros). Compared to the second quarter of 2019, however, the revenue decline was 79%. At 136 million euros, total operating income was 131% higher than the previous year (Q2 2020: 59 million euros, Q2 2019: 616 million euros). The increase in flight operations at the start of the summer resulted in total expenditure of 231 million euros, which is 46% more than in the same quarter of the previous year (Q2 2020: 158 million euros, Q2 2019: 571 million euros). In the second quarter of the year, adjusted EBIT was -95 million euros (Q2 2020: -99 million euros, Q2 2019: 46 million euros).
In the first half of 2021, total revenue decreased by 45% to 201 million euros (1st half of 2020: 363 million euros) or by 80% compared to the first half of 2019. Operating expenses on the same period were reduced by 33%. % to 402 million euros (1st half of 2020: 598 million euros, 1st half of 2019: 1,073 million euros). Adjusted EBIT for the first half of fiscal 2021 was – € 201 million and therefore 14% higher than for the first half of 2020 (- 235 million euros) but 279% lower than for the first half 2019 (- € 53 million). In comparison, the number of Austrian Airlines employees decreased by 9% to 6,132 employees (1st half of 2020: 6,756, 1st half of 2019: 6,999). To successfully bounce back from the crisis, the business needs to be around 20% smaller. This is one of the reasons why a total of 1,350 full-time positions have to be cut from the pre-crisis level. About 850 of these cuts have already been made by natural renewal.
The low occupancy of flights in the first quarter of 2021 can be seen in the number of passengers. Due to strict travel restrictions and a low number of flights at the start of the year, the number of passengers fell by 44% in the first half to 1.1 million (H1 2020: 2.0 million, H1 2019: 6.7 million). The available seat-kilometers amounted to 2.9 billion and were thus 37% lower than those for the same period of the previous year (1st half of 2020: 4.6 billion, 1st half of 2019: 13.6 billion) . The airline’s flights were booked at a capacity of 53.1% in the first half of 2021 (first half of 2020: 68.1%, first half of 2019: 78.1%). Its fleet has been reduced to 73 aircraft compared to mid-2020 (first half of 2020: 85). Much of the abandoned aircraft was due to the withdrawal of the Dash aircraft from the Austrian Airlines fleet.
Return to a diversified network of destinations and a stable liquidity situation
Austrian Airlines has steadily increased the number of destinations in the 2021 summer flight schedule to include more than 100 destinations in order to meet the growing demand from the tourism segment on short and medium-haul routes. The increase in inbound bookings towards the end of the first semester, partial unemployment subsidies and effective modernization measures ensure a stable liquidity situation which keeps the company on track. “Unfortunately, there is still no end to the pandemic in sight. However, our great adaptability and the consistent implementation of restructuring measures show that it is possible to successfully exit the company from the crisis ”, comments Alexis von Hoensbroech, CEO of Austrian Airlines. The judgment of the European Court (CEG) announced on June 14 was also very useful for Austrian Airlines. The EGC dismissed Ryanair and Laudamotion’s lawsuit against state aid to Austrian Airlines. The court ruled that the aid of 150 million euros from the Republic of Austria did not violate EU law.
Outlook for 2021
Despite the recent increase in demand, the comparison with the pre-crisis year 2019 shows that the company remains in a difficult situation. The unpredictability of the future of the pandemic also makes it difficult to predict the return of business and long-distance travel. However, many expect the effects of the pandemic to last until 2022 or longer. The annual result will also be affected by the existing uncertainties, which can be observed in the short-term booking behavior of passengers.