Lufthansa Group to take cost-cutting measures with Austrian Airlines

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The Lufthansa Group will cut up to 800 jobs at Austrian Airlines and centralize its operations solely from its Vienna hub in an effort to trim $97 million in costs from the carrier by the end of 2021.

In the group's third-quarter earnings call, CEO Carsten Spohr said that Austrian is facing "the mother of all battles" against low-cost carriers in Vienna. Besides the personnel cuts, which executives said largely would come from not filling vacated positions, the group also is standardizing Austrian's fleet by replacing all Bombardier Dash 7 Q400s with Airbus A320s by 2021.

In addition, the group also is standardizing Brussels Airlines' fleet and realigning its network, and it is downsizing aircraft in its cargo unit.

"In an increasingly challenging market environment, it is more vital than ever that we consistently take every action within our influence and further reduce our costs," according to CFO Ulrik Svensson. "We expect all group companies to make their contribution here."

Lufthansa Group's revenues were up 2% year over year to $11 billion during the third quarter. Traffic was up 3%, and capacity increased 2%; load factor was up 0.5 percentage points to 86.3%.

While the group said business on North Atlantic routes has been strong, it is facing "continued pricing pressures in Europe" and a general global economic slowdown. As such, it is planning limited growth for its 2019-2020 winter schedule and is cutting capacity for Eurowings.

The group reported a net profit of $1.3 billion in the quarter, up from $1.2 billion in the third quarter of 2018.

Source: Business Travel News

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