Austrian axes another 500 jobs after €95mn mid-year loss

Austrian Airlines (OS, Vienna) will axe another 500 jobs, downsizing by 20%, following a mid-year loss of EUR95 million euros (USD112.4 million) as the COVID-19 health crisis continues to impact the carrier despite an increase in summer bookings.

Presenting the company’s results for the first half of 2021, Chief Executive Officer Alexis von Hoensbroech said the company would in total shed 1,350 full-time employees, 850 of whom had already left through attrition. He told Austrian ORF TV that excess positions amongst flight and technical crews and administrative staff would likely be affected. The company had already shrunk by 9% to 6,132 employees compared to 6,999 at the same time in 2019.

“Virus variants, the travel restrictions often associated with them, and low demand for long-distance and business travel are clearly slowing down the recovery of the aviation industry. The increasing number of bookings in summer gives us some breathing space, but the crisis does not allow us to breathe a sigh of relief,” he said in a statement.

Revenue of EUR126 million (USD149 million) in 2Q21 represented a 79% decline compared to 2Q19, although it was 260% higher than the EUR35 million (USD41 million) earned in 2Q20 during two weeks of minimal operation in June 2020.

The ramp-up of flight operations at the beginning of Summer 2021 had led to total expenses of EUR231 million (USD273 million), 46% higher than the EUR158 million (USD187 million) in 2Q20, with EUR571 million (USD675 million) in 2Q19. Therefore, the adjusted EBIT in 2Q21 was a loss of EUR95 million (USD112.4 million), not much better than the EUR99 (USD117 million) loss in 2Q20.

In the first half of 2021, total revenue fell by 45% to EUR201 million (USD237 million) compared to EUR363 million (USD429 million) at the corresponding period in 2020, and 80% compared to the first half of 2019.

Operating expenses in the same period were reduced by 33% to EUR402 million (USD475 million), compared to EUR598 million (USD707 million) in the same period in 2020 and EUR1 billion (USD1.1 billion) in the first half of 2019. The adjusted EBIT in the first half of the 2021 financial year was thus a loss of EUR201 million (USD237 million), 14% better than the EUR235 million (USD278 million) loss at the same time in 2020, but 279% lower than in the EUR53 million (USD62.7 million) lost in 2019.

Von Hoensbroech said passenger numbers in the first half of 2021 fell by 44% to 1.1 million, compared to two million in 2020 and 6.7 million in 2019. Available seat kilometres amounted to 2.9 billion – 37% below those of the same period in 2020. Only 53.1% of seats were filled in the first half of 2021, compared to 68.1% in 2020 and 78.1% in 2019.

The airline’s fleet had been reduced to 73 aircraft compared to 85 in mid-2020, following the phasing out of the DHC-8-Q400 fleet.

Austrian Airlines gradually increased its number of destinations in the 2021 summer flight schedule to over 100 to meet growing demand on short and medium-haul routes. Increased bookings towards the end of June 2021, state subsidies for short-time work, and effective modernisation measures had ensured stable liquidity that kept the company on course. “Our high adaptability and the consistent implementation of restructuring measures show that it is possible to successfully get the company through the crisis,” he said. Despite this, the outlook for the rest of the year, particularly for the return of long-haul and business travel, remained uncertain because of the ongoing pandemic, which he expected to impact the company’s performance into 2022 or longer.