For many years Austrian Airlines was considered a problem child within the Lufthansa Group. However, the tide seems to be turning in Vienna: „We have managed to navigate our way out of the pandemic successfully over the last two years“, says Austrian Airlines CEO Annette Mann in an interview with Börsen-Zeitung. Demand remains stable, and Mann is optimistic about the current fourth quarter. But the airline CEO is not fully satisfied – despite the good results in the third quarter, the airline is still far from reaching the Group’s target return of 8%, as unit costs have not decreased.

„Austria is not a cheap location“, Mann points out as one of the reasons. She highlights the Austrian approach regarding wage development: „Collective bargaining takes place annually, and it is usually settled based on inflation.," she explains. Rental contracts are often indexed, and costs for outsourced services like catering in Austria are rising. Additionally, state-mandated fees and social security contributions in Austria are relatively high.

Austrian Airlines also faces fierce competition at its Vienna base. On the one hand, it competes with low-cost carriers in the short-haul and medium-haul markets. On the other hand, it faces competition from airlines like Turkish Airlines and Emirates on long-haul routes. Mann particularly highlights what she calls „severe market distortion“ when it comes to Turkish Airlines and Middle Eastern carriers. Countries like Turkey consider aviation to be a strategic industry, and as a result, the regulatory environment for the sector is highly favourable there.

Competitors from these regions are less affected by the regulatory burdens within the EU, and Mann explains this with an example: „The regulations for the blending of sustainable aviation fuel would increase ticket prices for a long-haul flight with a stopover in Vienna, rather than in Istanbul, by about 200 euros", she noted. .If the calculation were done according to the destination rather than the airline, the burden would be the same for all providers. „We’re not asking for subsidies. We want to use sustainable aviation fuel too, but it must be implemented fairly.“

Austrian Airlines is currently undergoing a big investment programme, including the conversion of its long-haul fleet to the Boeing 787 model. Mann speaks of an „investment mountain of over 3 billion euros" that needs to be earned within the group. It's not just about achieving the EBIT margin, but also other strategic considerations. As does the goal of returning the long-haul fleet of Austrian Airlines to pre-pandemic levels. But economic developments are also a factor. Due to weak performance earlier in the year, plans for two additional new jets have been put on hold.

„Austrian wouldn’t be viable on its own“, admits Mann. The airline has been part of the Lufthansa network since March 2022, and her own contract runs until 2030. Austrian Airlines is, in fact, „a highly integrated part of the overall Lufthansa network.“

The business is made more difficult by a higher seasonality compared to Lufthansa and Swiss, which stems from the high proportion of leisure travellers. This makes it more challenging to manage, as much more capacity is needed in the summer than in the winter. Nevertheless, Austrian’s operational performance is seen as exemplary within the group.

„What I appreciate about Austrian Airlines is the great pragmatism that prevails here“, says Mann, who has been with Lufthansa for 22 years, and was previously responsible for the sustainability programme. Many things run under the motto „We’ll do it!“. Problems are fixed, and they don’t get bogged down in academic debates. „A lot gets done this way," she says.

However, the development of long-term perspectives often takes a backseat, admits Mann: „That’s more of a strength of the Swiss.“ Everyone has their role within the Lufthansa Group.