Austrian Airlines is launching a fundamental rework of its network and fleet strategy in an effort to reach an operating profit in 2011 and prepare for future growth.

Executive board members Andreas Bierwirth and Peter Malanik tell a Vienna news conference that the airline will no longer focus on niche markets in Eastern Europe, but rather fight for a stronger position in large-volume catchment areas in both Eastern and Western Europe.

The money-losing carrier was recently taken over by Lufthansa. As part of the European Commission's approval of the takeover, the Austrian carrier is not allowed to grow until 2015 or until it manages to post an operating profit. If it does not manage a quick turnaround, it will therefore be forced to shrink further. As the airline sees Vienna predominantly as a European hub in the future, those cuts would be made to its long-haul fleet. If needed, a further two long-haul aircraft (out of 10) would be taken out of service. "But we don't plan to do that," Bierwirth insists. "This EC obligation is also a huge chance for the company because it keeps everybody motivated and focused on the target."

Austrian's network revamp has several dimensions. First, the airline plans to restore connections allowing passengers from Western Europe to reach Eastern destinations in the morning via Vienna, which is often impossible now. Aircraft rotations are also geared more toward higher productivity rather than a maximum number of connections during peak hours. On the fleet level, almost all 50-seat turboprops and jets will be sold by next year, leaving only a few for regional, non-Vienna routes. With Austrian also reducing its exposure to the once big charter business, the airline is redeploying a total of six Boeing 737-800s and one Airbus A321 on scheduled routes. These planes will often replace regional aircraft. For instance, the Vienna-Zurich market is now served three times daily with Fokker 70s, but will go to Boeing 737-800s with no frequency reduction.

Bierwirth says two or three European destinations may be scrapped in addition to one -- Hannover, Germany -- already announced.

The airline predicts "significantly falling average yield next year" and wants to counter that development with larger aircraft that have lower unit costs.

Malanik will also start negotiations with Austrian's workers' council on productivity improvements. The airline wants to get as close as possible to the legal annual maximum of 900 flying hours for pilots. He declined to say how many hours Austrian's aircraft fly currently, but hinted that a lot more hours are possible. "We basically want growth without any additional staff costs," explains Bierwirth.

Image credit: Star Alliance