Swiss best performing Lufthansa Group carrier in 2010; Austrian, bmi incur losses

Austrian Airlines 737-600. Photo: By Rob Finlayson.

Despite a successful year in which it rebounded from a €34 million 2009 loss to earn a €1.1 billion ($1.53 billion) net profit in 2010 (ATW Daily News, March 18), Lufthansa Group Chairman and CEO Christoph Franz conceded last week in a letter to shareholders that the performance of LH subsidiary airlines was "mixed."

Swiss International Air Lines posted 2010 operating income of €298 million, more than triple a €93 million operating profit in 2009, on a 24% rise in revenue to €3.46 billion. "The success of Swiss is due largely to effective cost management, but also to strong demand and the upswing in intercontinental and freight business, as well as strong sales in the domestic Swiss market," LH stated.

Austrian Airlines, however, incurred a €66 million operating loss in 2010, narrowed from a €230.9 million deficit in 2009, while British Midland posted an operating loss of €145 million in its first full year as an LH carrier. Franz said, "Austrian Airlines and bmi are still working flat out at their restructuring."

OS said its improved result is owing to a new market strategy in Europe, restructuring efforts and synergies in the LH Group. The airline carried 10.9 million passengers last year, up 9.7% over 2009. Load factor rose 2.2 points to 76.8%.

"We are moving in the right direction," OS Executive Board Member and CCO Andreas Bierwirth told ATW last week in Vienna. "However, the restructuring of OS is far from being completed. We have a great deal of work still left to do."

The airline has cut 1,000 jobs over the last year to reduce its number of employees to 6,000. "The productivity of every employee increased by 23% in terms of turnover," COO Peter Malanik claimed.

Bierwirth said OS needs to "sell more business class tickets" and acknowledged its Airbus A320s and Boeing 737s have not yet reached LH Group productivity standards. Asked by ATW if OS's new cost base can be compared to lower cost airlines such as Air Berlin, he said, "We are starting to close the gap."

Meanwhile, Germanwings' 2010 operating loss of €39 million was reversed from an operating profit of €23.9 million in 2009. The carrier's full-year revenue lifted 8.6% compared to 2009 to €630 million.