SALZBURG—Lufthansa subsidiary Austrian Airlines has taken the next steps to receive €767 million ($833 million) in financial assistance from the state to survive the COVID-19 crisis.
The carrier reached an agreement with its flying personnel, which represent about 3,800 of the nearly 7,000 employees.
The saving plans include long-term use of short-time work until 2022, salary reduction between 5-15% and suspension of inflation adjustments and wage increases.
The carrier estimates a total number of layoffs so far of 1,100 full time staff.
As part of Austrian Airlines’ plan to enable a restart, the carrier is targeting 20% cost savings with its suppliers, business partners and employees.
The Star Alliance member was forced to suspend flights March 18 and could resume services in June. It has extended the grounding of its fleet until June 14.
“The restart is expensive and costs liquidity. That’s why we go ahead very carefully,” spokesperson Peter Thier told Aviation Daily. Austrian Airlines plan to operate 25% to 50% of its total capacity this year, maybe 75% by 2023.
The airline’s first flights when it resumes will be point-to-point routes, such as to Germany. The restart of its Vienna hub may follow one or two months later. In mid-July, leisure flights may resume.
“There is no immediate danger of insolvency for Austrian Airlines right now,” Thier said. “However, this crisis throws us back five years.”
Austrian is awaiting the outcome of financial aid negotiations between the German federal government and Lufthansa. The Austrian government has held back on aid commitments pending the Berlin deal. The government is seeking assurances that its financial support will remain solely dedicated to its home carriers and not be used elsewhere. The government is also seeking commitments about the future status and size of its airlines.
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