Air Transport World

Austrian Airlines Group: results)

The parent of Austrian, Lauda Air, Austrian arrows and Slovak Airlines paid a heavy price for entering 2005 unhedged. Fuel costs jumped 47% on just a 6% rise in production and it lost [euro]129.1 million ($153 million) compared to income of [euro]43.9 million in 2004. Although revenues grew 5% to [euro]2.5 billion, operating expenses surged 13%. Contributing to higher expenses was an 8% increase in personnel costs as AAG added staff in anticipation of higher demand that did not materialize.

Threatened by encroaching LCCs and lacking an intercontinental network of sufficient size (a la Lufthansa or British Airways) to offset their inroads, AAG is banking on Focus East, a strategy to take advantage of its ultra-efficient hub at Vienna to build a network to Eastern Europe and the Middle East. …

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