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Austrian Airlines

Key people Jaan Albrecht (CEO), Karsten Benz (CCO), Heinz Lachinger (CFO), Klaus Froese (Managing Director, Tyrolean Airways)
Employees 6,236 (April 2014)
Austrian Airlines (German: Österreichische Luftverkehrs AG, sometimes shortened to Austrian) is the flag carrier of Austria and a subsidiary of the Lufthansa Group.[2][3] The airline is headquartered on the grounds of Vienna International Airport in Schwechat[4] where it also maintains its hub. The company operates scheduled services to over 130 destinations worldwide[5] and is a member of the Star Alliance.

Since 1 July 2012 and until 31 March 2015,[6][7][8] when both will merge,[9] all flights of Austrian Airlines are operated by subsidiary Tyrolean Airways.

Early years[edit]
On 3 May 1923 Walter Barda-Bardenau received approval by the Austrian government for establishing an airline. He participated in the newly formed Austrian Airlines (German: Österreichische Luftverkehrs AG) with one percent, with the remaining shares went to the Austrian railway transportation institution (50%) and the Junkers-Werke (49%).

The fleet initially consisted of Junkers F 13's. The first flight of the company took place in Vienna on 14 May 1923 by Munich, with pilot Hans Baur. The landing took place in Vienna Jedlesee; there occurred a conversion to float and the connecting flight to Budapest.

The company initially operated as part of the reasoned by Junkers Trans European Union. Among the destinations included Munich, Budapest, Nuremberg, Graz, Klagenfurt and St. Wolfgang. Some targets in Austria were served with seaplanes. The dissolution of the Union in September 1926 led to the discontinuation of some compounds.

From 1927 the company procured with government support new aircraft. The completed in the same year operating partnership agreement with Deutsche Luft Hansa foresaw line connections that were planned and operated jointly by the two companies. In the period that followed a route network starting to Berlin, Budapest and Milan ranged from Vienna created. In 1932 Luft Hansa Junkers of the previously held 49% interest. After the end of the world economic crisis the fleet with several Junkers Ju 52/3 m was added.

1938, the company began planning of routes to Rome, Paris and London. This makes the use of Junkers Ju 90 was provided. After the annexation of Austria by Germany in March 1938, these plans were abandoned. The airline was now fully under the control of Lufthansa and went on 1 January 1939 in this on. In June 1939, the company was deleted from the commercial register.

After the World War II, Austria was again separated from Germany. As a result, Austria was left without a national airline. Austrian Airlines was formed as Österreichische Luftverkehrs AG through the merger of Air Austria and Austrian Airways and began operations on 30 September 1957, making its maiden flight on 31 March 1958 when a Vickers Viscount 779 took off from Vienna to Zurich and London. The domestic services launched on 1 May 1963. The airline's transatlantic services began on 1 April 1969 with a Vienna via Brussels to New York service in co-operation with Sabena.

Jet period[edit]

Sud Caravelle Wien of Austrian Airlines at Vienna Airport in 1972
At first, Austrian Airlines had competition from Adria Airways because of passengers from the Austrian provinces of Styria and Carinthia commuting to Yugoslavia to use airports in what is now Slovenia. Austrian ordered its first jet airliner, the Sud Aviation Caravelle, on 18 February 1963 and the type was operated until 1973. From 1971, Austrian started to standardise her fleet in a short time frame in favour of 9 Douglas DC-9-32, that would serve for many years on short and medium-haul flights. In 1975, the first of 5 DC-9-51 was introduced. In 1977, Austrian become the first Customer for the DC-9-80 (or McDonnell Douglas MD-80) along with Swissair.

The first MD-81 entered service in October 1980, allowing longer-range flights. In 1984, Austrian became the first customer for the MD-87 and played a significant role in the project. The first MD-87 entered service at the end of 1987, as well as MD-83 from 1990, while 6 MD-81 were upgraded to MD-82 standards.

Developments from 1990 to 2008[edit]
The 1990s were under the sign of cooperation and alliances. Austrian was one of the first company to join the Qualiflyer Group, founded by Swissair. It was also a time of quick expansion in long-haul flights, with flights to China and South Africa.

In 2000, Austrian became a member of Star Alliance and acquired Lauda Air. It acquired Rheintalflug on 15 February 2001. Its name was shortened to Austrian in September 2003, when it rebranded its three constituent carriers.[5] On 1 October 2004 the Flight Operations Departments of Austrian and Lauda Air were merged into a single unit, leaving Lauda Air as a brand name only for charter flights. It has 6,394 employees.[5] The other subsidiary, Tyrolean Airways, specialised in regional flights, and was merged with Rheintalflug.

In October 2006, Austrian was forced to adopt a stringent cost-saving policy, and 2007 saw the shedding of over 500 jobs. Many long-haul destinations were cancelled, such as Sydney via Kuala Lumpur, Melbourne via Singapore, Kathmandu or Shanghai. 3 remaining Fokker 70 were sent to Tyrolean Airways. It was also decided to abandon the long-haul Airbus planes, consisting of 4 Airbus A340 and 4 Airbus A330, in order to standardise the fleet in favour of Boeing 777 and Boeing 767. Austrian Airlines removed complimentary in-flight meals and alcoholic drinks on short haul services, introducing what was called a "Self Select Bistro Service", except on flights from London and any flights above 100 minutes in duration.[10] Head office moved from Oberlaa to Vienna Airport in 2007, whereas headquarters remained in Vienna itself.

After a small profit of 3.3 million euros in 2007, financial guidance for 2008 had to be changed negatively several times, to a loss of 475 million euros expected as of end of November.[11]

Privatization and takeover by Lufthansa[edit]
In June 2008, the Merrill Lynch investment bank advised the Austrian Government to sell AUA to a foreign company. Interest was shown by Lufthansa, Air France-KLM, Royal Jordanian, Air China, Turkish Airlines, Aeroflot, S7 Airlines and Singapore Airlines. Of those, Lufthansa, Air France-KLM and S7 emerged.[12]

On 13 November 2008, state holding ÖIAG announced that Lufthansa was selected. The German company was to enter Austrian’s capital with a 41.6% share, for which it would pay €366,268.75.[13] AUA CEO Alfred Ötsch and OIAG chairman Peter Michaelis were heavily criticised for revealing to Lufthansa that it had to take over the €500 million debt only once the deal had been made binding. Michaelis refused a new tendering procedure, but was made a scapegoat with his shareholder rights removed,[14] and Ötsch resigned on 29 January 2013.[15]

On 1 July 2009, the European Commission initiated investigation on the acquisition for breach of free trade rules, suspecting that the tendering process was a fake one, everything being already decided in favour of Lufthansa.[16] Finally, with approval from the European Commission, Lufthansa purchased Austrian Airlines in September 2009.[17]

Shares in Austrian Airlines AG were suspended on Vienna Stock Exchange on 4 February 2010.[18] After a time of uncertainty following the demission of appointed CEO Thierry Antinori,[19] the arrival of Jaan Albrecht as the new CEO in 2011 signalled the beginning of a new era for the airline, with improving passenger numbers and a more strategic position within the Lufthansa framework. The completion of extension works at the Vienna International Airport will give the airline more room for expansion. As a result, in January 2012, a new strategy was implemented, with the addition of 11 new aircraft in the next three years, leading to a renewal of the fleet on the long term, with Airbus planes serving medium-haul routes and Boeings serving long-haul routes.

In December 2011, a new cost-saving plan was revealed, as AUA’s figures were still in the red despite the shedding of 2500 jobs. Lufthansa refused to provide financial support.[20] In March 2012, Austrian called once more for recapitalisation. Lufthansa approved a capital increase of €140 million, providing effective measure to be taken in order to address the structural deficiencies.[21]

The Lauda Air subsidiary was officially merged into Austrian Airlines on 1 July 2012.[22]

Operational transition to Tyrolean from 2012[edit]
On April 30, 2012, after failure of negotiations over cost cutting measures, AUA operations were taken over by subsidiary Tyrolean Airways.[23][24] Since this date all Austrian flights are operated by Tyrolean. However 110 pilots and 250 flight personnel chose not to go to Tyrolean and to instead leave the group.[25]

Austrian Airlines retired its final Boeing 737 (a 737-800 variant in Lauda Air markings) in April 2013 as part of its fleet consolidation exercise. The 11 strong Boeing 737 fleet was replaced by 7 Airbus A320s, with an expected annual saving of €17 million through the move to a single type.[22]

Merger of Austrian and Tyrolean from 2015[edit]
In October 2014 it has been reported that Tyrolean's flight operations and staff will be reintegrated into Austrian Airlines itself by 31 March 2015[6][7] as a new labour agreement has been reached.[6][8]

Austrian announced the presentation of their overhauled concept called "New Austrian" for 26 March 2015. This will include a new corporate design and the annoucement of new routes amongst other changes.[26]

Corporate affairs[edit]
Ownership and subsidiaries[edit]

Austrian Airlines headquarters in Office Park 2 at Vienna International Airport

Austrian Airlines Training Center at Vienna International Airport
Austrian Airlines Group is wholly owned by Lufthansa.

The Group owns shares in 24 companies, including:


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