Lufthansa all-clear for AUA capital increase

Austrian Airlines (AUA) is set to receive fresh capital from Lufthansa while bosses up the pressure on the ailing carrier’s pilots.

Lufthansa CEO Christoph Franz said yesterday (Thurs) that the Viennese airline – which was acquired by Lufthansa in September 2009 – would get 140 million Euros. He warned that the money would only be transferred if the AUA board managed to keep lowering operative costs.

AUA boss Jaan Albrecht was ordered to save 220 million Euros a year. The German-Mexican aviation industry expert and former pilot plans to lower AUA’s personnel costs which currently make 25 per cent of the company’s overall expenditure.

Albrecht and co-AUA board members Peter Malanik and Karsten Benz want the carrier’s 600 pilots to accept an immediate pay freeze and a cut of 25 per cent in the long run. The works council and Austrian unionists said after the most recent round of negotiations – which ended without results – they wanted to continue discussing a “fair model”.

Malanik said yesterday that his team was ready to meet the employees’ representatives again but also warned that the creation of a new type of contract was on its way. Albrecht claimed that AUA staff’s contracts must be “modernised” to ensure the airline’s competitiveness while Malanik underlined the urge to stop its “cost explosion”. He said that substantial changes to the carrier’s structure were needed.

AUA pilots’ contracts feature automatic salary increases and comparably generous pensions. Bosses of the airline plan to create new contracts similar to those of the pilots of AUA affiliate Tyrolean Airways (Austrian Arrows). Sources close to the AUA executive board claimed yesterday that ground personnel’s wages would not be affected by the airline’s upcoming austerity package. Reports have it that Lufthansa and AUA bosses were unable to find a significant savings potential – in contrast to the contracts of pilots and cabin crew.

Franz said yesterday he was convinced that AUA had the potential to achieve a turnaround but also warned that Lufthansa would not continue pouring money into the airline indefinitely if it failed to perform profitably. AUA suffered operative losses of 59.4 million Euros last year. Lufthansa initially wanted the carrier to be back in the black by the end of this year. Now managers admitted that AUA was likely to make a loss once more in 2012.

Franz argued that he was in charge of 120,000 Lufthansa Group employees. While AUA and low-cost carrier Germanwings struggled last year, Lufthansa and Swiss did comparably well. Nevertheless, Lufthansa CFO Stephan Gemkow claimed that the aviation industry competitors had to stop engaging in price wars due to sharply soaring kerosene prices. He said the era of dumping ticket prices must come to an end.

The Lufthansa Group managed to increase its passenger figure by four per cent to nearly 6.7 million from February 2011 to February 2012 – despite a strike at Frankfurt Airport (FRA). The labour conflict at Germany’s busiest aerodrome forced the firm to cancel almost 1,500 connections last month.