Austrian Airlines has started an extensive review of how and when to replace its regional aircraft fleet. The airline is looking at three scenarios: getting rid of the segment altogether and focusing on traditional narrowbodies, introducing a new 100-seater while keeping its as a smaller alternative for thinner routes or pulling out of the below 100-seat segment, CEO Jaan Albrecht tells Aviation Week.
Austrian intends to retire its more than 20-strong fleet of Fokker 70s and 100s, as expensive heavy maintenance checks are due for these types in 2016 and 2017. The aircraft predominantly are used on niche routes from Vienna to Eastern Europe and Central Asia, one of Austrian’s specialties.
If the airline was to go for a larger aircraft, it could only continue to fly routes with sufficient traffic and might have to pull out of smaller markets. Retiring the Q400s would mean that Austrian might be forced to abandon regional short-haul routes. “It is not an easy question,” Albrecht says.
The airline has a long heritage of fleet complexity that it is trying to reduce. Austrian in 2012 retired its lastas part of its restructuring. Aircraft such as the or 195 could be an option for the Central European routes. Given that the Fokker retirement is set to happen within the next three or four years, the airline is now under some time pressure.
Next in the line for replacement is Austrian’s fleet of six-300ERs that it inherited from Lauda Air. The aircraft have just been refurbished, with much-improved business-class seats. The business case for the new cabin has been based on an eight-year cycle, leading the airline to continue 767 operations until around 2020, when all of that fleet will be well over 20 years old.
The airline plans to continue-200ER operations until 2025. Austrian currently operates four of the type and is taking a fifth aircraft mid-2014 to expand long-haul capacity.
Austrian’s future long-haul fleet will likely feature a single type, either the-900 or the 777-9X. Parent company has just placed a large order for both types and its subsidiary is expected to take some of the options the contract provides.
Albrecht says Austrian would like to catch up on missed opportunities in the long-haul arena. “In the past, Austrian went from crisis to crisis and did not have the resources to look at long-haul expansion,” he explains. But now he believes the worst of the restructuring is over.
The airline plans to make an operating profit this year, following a painful cost-savings program pushed through last year. The carrier has just re-launched services to Chicago O’Hare International Airport and is pleased with the initial bookings.
Around 40% of long-haul passengers connect through Vienna, but if short-haul is included, the connecting share goes up to around 55%. While Albrecht does not want to take capacity out, he is aware that Austrian needs to strengthen its local traffic in order to become less dependent on lower-yield and higher-cost one-stop flying.
The ex-CEO ofjoined Austrian in November 2011 and found himself in the middle of the airline’s worst financial crisis. After a two-month deep dive into the figures and survival options, Albrecht decided to transfer Austrian’s operations to regional subsidiary Tyrolean in what became a tumultuous fight with unions. Lufthansa supported the transition with another €160 million ($217 million), €90 million of which has been used for the new long-haul business-class cabin that replaced a very outdated product.
The struggle with unions is continuing, after a Vienna court found that the transfer was illegal. Austrian disputes that finding, and has launched an appeal against the ruling. At the same time, negotiations are continuing for an out-of-court settlement.
But Albrecht cautions that any agreement would have to be “mutually beneficial.”