• Intercont-Business drives passenger growth: plus seven percent
• Strong competition leads to drop in first-quarter earnings to minus EUR 99 million
• High fuel and maintenance costs comprise an additional burden on earnings
Austrian Airlines reported adjusted earnings before interest and taxes (adjusted EBIT) of minus EUR 99 million in the seasonally-related weak winter quarter, down from the comparable figure of minus EUR 73 million in Q1 2018. This substantial 36 percent decline in earnings can be mainly attributed to three factors i.e. higher fuel and maintenance costs as well as more intense competition at Vienna Airport. Nevertheless, Austrian Airlines succeeded in expanding its business in spite of competition from low-cost carriers. Passenger volume was up seven percent to 2.7 million.
“The price war in Vienna has now broken out”, says Austrian Airlines CFO Wolfgang Jani, commenting on developments. “Even if customers can currently enjoy low ticket prices, we will end up claiming some victims among the low-cost airlines. We will defend our role as market leader”.
First-quarter revenue fell by four percent to EUR 382 million, whereas total operating revenue was down three percent to EUR 404 million. In contrast, operating expenditures rose by three percent to EUR 502 million due to higher fuel and maintenance costs (refer to the enclosed chart).
The adjusted earnings before interest and taxes (adjusted EBIT) equaled minus EUR 99 million, comprising a decrease of 36 percent or EUR 26 million below the prior-year level of minus EUR 73 million in the first quarter of 2018.
Austrian Airlines succeeded in significantly expanding traffic volume in spite of the unfavorable earnings situation. The airline transported 2.7 million passengers in the first three months of the current financial year, comprising a year-on-year increase of seven percent or about 182,000 more passengers than in the prior-year period. The flight offering in available seat kilometers (ASK) also rose by seven percent to more than 5.6 billion. Capacity utilization (passenger load factor) further improved by 0.4 percentage points to 73 percent.
“We are expanding our capacity, attracting more passengers and also generating a higher passenger load factor. Despite tough competition, our product is well received”, CFO Jani adds.
Higher level of punctuality and reliability
The regularity of operation improved to 98.9 percent in the first quarter of 2019. Punctuality also showed an upward trend. Punctuality on departure was up to 82.6 percent, whereas punctuality on arrival rose to 83.9 percent. Austrian Airlines operated a total of 28,754 flights in the same period, or an average of 319 flights per day.
The airline’s staff remained stable, amounting to 7,061 employees as at the balance sheet date of March 31, 2019 (March 31, 2018: 7,089 employees).
Austrian Airlines expects a challenging year as a consequence of low-cost competition at Vienna Airport and upcoming investments in aircraft. “We anticipate a difficult year overall in 2019. We will continue to be profitable, but considerably below the previous year”, Jani concludes. Austrian Airlines generated an adjusted EBIT of EUR 83 million in 2018.