Company
• Winter 2020/2021: Production reduced to 30 percent of the prior-year level
• Short-time work at Austria’s red-white-red flag carrier will be expanded
• CFO Otto: “We are equipped to handle a second wave of the coronavirus, but the next summer will be decisive.”
The renewed global increase in COVID-19 infections has led Austrian Airlines to adapt its winter flight schedule. Within the context of an in-house event, the Austrian Airlines Executive Board informed airline employees today about current developments and plans for the 2020/21 winter season. Production (flight offering) in the winter flight schedule will not equal 50 percent of the previous year’s offering on average as originally intended, but only an average of 30 percent of the prior-year level as a result of the many travel restrictions which have been imposed. The liquidity situation of the airline is good and above target. Nevertheless, as CEO Alexis von Hoensbroech explains: “In the past few weeks it became increasingly clear that we would have to dress more warmly this winter than we thought. The new entry restrictions on the part of Germany, Switzerland, Belgium and many other countries have made it necessary for us to make adjustments to our offering. We are prepared for this.” He compares the current situation faced by Austrian Airlines with a ship. “Our objective is to maneuver our company through this ‘storm’ based on our combined efforts. We do not know how long this storm will last. For this reason, we have to make ourselves weatherproof and reduce the monthly outflow of funds as much as possible”, the Austrian Airlines CEO adds.
Austrian Airlines will offer flights to about 60 destinations in the upcoming winter flight schedule, which is valid from the end of October 2020 to the end of March 2021. This represents about 20 flight destinations less than in the previous year. At the same time, many destinations will be served but with substantially reduced frequencies. In addition to operating long-haul flights to Newark, Chicago, Washington and Bangkok, Austrian Airlines first resumed its flight service to Shanghai last week. Starting in the middle of December, it is planned to operate flights to traditional holiday destinations such as Cape Town, Mauritius and the Maldives. These destinations will be served twice per week, subject to extended entry restrictions.
Liquidity still above target despite difficulties in production
As challenging as the current situation is for Austrian Airlines in terms of actually operating flights, the liquidity of Austria’s red-white-red flag carrier remains above target thanks to stringent cost discipline. The last tranche of the loan amounting to EUR 100 million is expected to be transferred to Austrian Airlines shortly. In addition to a total of EUR 300 million in loans, the national airline also received EUR 150 million in emergency aid from the Austrian government and an injection of EUR 150 million in fresh equity capital from the Lufthansa Group, which owns the company. On average, the liquidity of the company declines by about EUR 40 million per month. For this reason, Austrian Airlines is striving to cut costs even more. “These efforts include expanding short-time work in the company, thus adjusting it to the reduction in production,”, explains Andreas Otto, who took over the position of CFO in addition to his work as CCO. “We are equipped to handle a second wave of the coronavirus thanks to our good liquidity situation, but next summer will be decisive. If we can get a grip on the coronavirus by then, land will be in sight again. Many passengers will also have a corresponding need to catch up with respect to travelling”, Management Board member Andreas Otto predicts.
Rapid antibody tests designed to restore the freedom to travel
Austrian Airlines is intensively working on introducing rapid antibody tests for passengers in order to restore the freedom to travel even before a possible vaccination solution is developed. “The current travel restrictions comprise a burden on the entire tourism sector. We need comprehensive testing for travelers and have to reconcile the freedom to travel and infection prevention so that we will be able to cut back on travel restrictions and quarantine obligations,” Austrian Airlines COO Jens Ritter states. The first test flights are already planned for the middle of October.
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