· Adjusted EBIT of minus EUR 3 million in the first half year, EBIT at EUR 1.0 million
· Passenger growth up ten percent after fleet expansion
· Outlook: Positive earnings expected in the entire year 2018, but below prior-year level
Austrian Airlines, Austria’s flag carrier, managed to achieve business results at the break-even point in the first half of 2018 following a strong second quarter performance. Adjusted earnings before interest and taxes (adjusted EBIT) amounted to minus EUR 3 million, whereas EBIT was at EUR 1 million. The year-on-year earnings decline is mainly attributable to two factors, i.e. increased prices for jet fuel and higher expenses for flight irregularities resulting from thunderstorms, airspace restrictions as well as works meetings in March 2018. Investments in the fleet and service had a positive impact. The number of passengers carried by the airline in the first half of 2018 was up ten percent to 6.4 million.
“We succeeded in compensating for the poor winter quarter on the basis of increased demand and in spite of higher jet fuel costs. We are experiencing fresh impetus, especially in Europe and in our holiday business”, says Austrian Airlines CFO Wolfgang Jani.
Following application of the rules contained in IFRS 15*, revenue mathematically declined by eight percent to EUR 1,008 million. However, adjusted for this effect, revenue was actually up by five percent and operating revenue rose by four percent. Operating expenditures fell seven percent to EUR 1,056 million but climbed five percent when adjusted for the effect of IFRS 15 (refer to details in the appendix).
Adjusted EBIT, which, for example, deducts book gains from aircraft sales, amounted to minus EUR 3 million (H1 2017: EUR 3 million). EBIT totalled EUR 1 million, below the level of EUR 8 million in the previous year. Adjusted EBIT in the second quarter of 2018 rose three percent to EUR 65 million and EBIT climbed seven percent to EUR 68 million, thus offsetting the typical losses generated in the winter months. EBIT in the first quarter of 2018 had amounted to minus EUR 67 million.
More flights, more passengers, higher capacity utilization
Austrian Airlines substantially expanded its traffic volume. In the first six months of 2018, it transported 6.4 million passengers. Comprising a rise of ten percent or about 570,000 more than in the first half of 2017. The flight offering measured in available seat kilometres (ASK) was increased by five percent to 12.9 billion. Capacity utilization (passenger load factor) rose by 2.3 percentage points to 75.8 percent.
Since the beginning of the year, Austrian Airlines has operated a total of 72,009 flights using 85 aircraft, representing an average of about 398 flights per day. The regularity of operation was 98.1 percent in the first half year, whereas the punctuality on depature equalled 80.2 percent. The deterioration in performance compared to the first half of 2017 is mainly due to the adverse weather conditions and slot allocations as well as flight cancellations resulting from the works meetings in March.
Austrian Airlines restructures route network and increases North American frequencies
As already reported, Austrian Airlines will realign its route network starting with the upcoming winter flight schedule. Unprofitable routes such as Hong Kong, Havana, Colombo, Isfahan, Shiraz and Linz will be eliminated from the airline’s flight offering. In contrast, capacities to Chicago, New York, Toronto, Peking and Shanghai will be increased. Moreover, Austrian Airlines will offer flights to Cape Town in South Africa as of October 27, 2018.
“We want to improve our offering for business travelers and strengthen the Vienna flight hub with respect to Eastern Europe”, states Austrian Airlines CEO Kay Kratky.
It was a great pleasure for Austrian Airlines to be given top ratings in the renowned Skytrax World Airline Awards 2018 in June. In particular, Austrian Airline’s service on the ground and on board was honored with the top award in the category “Best Airline Staff Service in Europe” for the fifth straight year. Austria’s red-white-red flag carrier was even ranked first worldwide for its DO & CO Business Class catering. Austrian Airlines moved up one notch to 16th in the global rankings (2017: 17th) of the world’s best airlines.
“We are very proud of our employees. They are real service champions”, says CEO Kay Kratky.
The total staff of the Austrian Airlines Group amounted to 7,118 employees as at the balance sheet date of June 30, 2018 (June 30, 2017: 6,713 employees). This substantial increase of 405 employees (up six percent year-on-year) mainly related to hiring cockpit and cabin crew.
Outlook 2018: Austrian Airlines maintains earnings forecast
“The second quarter, especially the month of June, has once again put us back on track. We can maintain our forecast of generating clearly positive business results. However, we expect earnings to be below the prior-year level”, predicts Austrian Airlines CFO Wolfgang Jani. The adjusted EBIT totalled EUR 94 million in the 2017 financial year.