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Lufthansa focuses on AUA's premium area

Lufthansa has denied that its planned activity increase in Berlin is company-internal competition for Austrian Airlines (AUA).

The carrier, which was founded in 1953, will offer four times more seats in three months’ time when a new airport is put in operation in the German capital city. Lufthansa currently does business at more than 220 airports all over the world. It will concentrate on Eastern Europe (EE) when operations at the new airport in Berlin start later this year.

AUA was taken over by Lufthansa in what was widely seen as the final option to protect the company from bankruptcy in 2009. The Viennese airline succeeds with its services to destinations in EE while other branches of the company are in trouble. A spokesman for Lufthansa said yesterday (Thurs) that his airline’s plan to offer more flights to EE was a declaration of war to AUA. He argued that it would be a mistake not to consider an expansion of operations in EE since many parts of the region show promising economic developments.

Lufthansa said earlier this week that it suffered a net loss of 13 million Euros last year. The carrier made a profit of 1.1 billion Euros in the previous year. Lufthansa managed to increase its turnover by eight per cent from 2010 to 2011 to 28.7 billion Euros. Lufthansa sold struggling affiliate British Midlands (BMI) to competitor British Airways last December for 207 million Euros. The German aviation company was forced to write off 285 million Euros at BMI shortly before the deal was sealed.

Bosses of Lufthansa – a Star Alliance member – argued that rising kerosene prices caused immense pressure last year. German and Austrian business papers report that the company – which is Europe’s largest airline in terms of passenger figures and fleet size – is ready to lay off hundreds of AUA staff if the Austrian affiliate’s works council refuses to accept a reform of contracts.

AUA supervisory board boss Stefan Lauer’s suggestions would mean that AUA pilots’ wages shrink by up to 25 per cent in the coming years. They currently earn 13,000 Euros before tax a month. Lufthansa chiefs and AUA supervisory panel members want to lower their incomes to volumes comparably to what Tyrolean Airways (Austrian Arrows) pilots earn at the moment. Pilots of the regional carrier, which is part of the AUA Group, receive around 7,000 Euros.

A decision regarding the salary controversy and other austerity measures is expected for later this month as Lufthansa wants AUA CEO Jaan Albrecht to sort out the issues soon. The German carrier wants AUA to make a profit this year. Lufthansa’s "plan b" for AUA is to drastically reduce its workforce level and fleet size, according to the press. AUA suffered a loss of almost 65 million Euros last year. It performed similarly in 2010 while passenger numbers are on the rise. AUA registered 11.26 million customers in 2011, up by 3.4 per cent compared to 2010.

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