Austrian begins long-term restructuring measures

3 September 2009

Having already fulfilled its ambitious package of short-term measures designed to generate savings of EUR 225 million this year, the management of Austrian Airlines is now confronting the challenge of improving the company’s result in the medium term.

To achieve an EBIT margin of 6-7%, the standard in Europe, the company needs to produce an improvement in its result worth some EUR 200 million by 2012. This will be done on a staged basis.

Commenting on the measures to come, Dr. Andreas Bierwirth and Dr. Peter Malanik, Austrian’s Chief Commercial Officer and Chief Operations Officer respectively, said the following: “Although our ability to achieve this objective is now being hampered by the fact that the global economic crisis has now developed into a full-blown recession, the situation has also shown just how important it is that the company be restructured if it is to be well-positioned for the future and better placed to resist downturns. This is why consistent measures are so urgently necessary to improve the cost structure of the Austrian Airlines Group in the long term. Our aim is also to achieve a significant reduction in staffing costs by means of structural improvements and productivity increases.”

For this reason, Austrian Airlines will now begin restructuring the company in stages, with the aim of creating more streamlined and efficient structures. This process will also result in downsizing at the company, with some 1,000 posts to be cut by mid-2010. This will be done in stages, in the form of mutually agreed solutions, outplacements and by not refilling vacancies.

Although the aim will be to design the reduction in staff numbers to be as socially responsible as possible, there will also be layoffs. Work is currently ongoing on the detailed concepts. Talks on the issue have already begun with the Works Councils affected.

A more effective future: the new Austrian Sales and Network divisions
Besides several ongoing reorganizational measures, the first major restructuring at the company will take place in its Sales and Network Divisions. By separating the divisions, cutting management posts and initiating a complete restructuring, the company intends to achieve an improvement in quality and strengthen its sales both within Austria and abroad. The number of full-time posts to be cut in the division will be around 300. Restructuring in other divisions of the company will take place on a staged basis.

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