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Austrian Airlines

euro adhoc: Austrian Airlines AG
Quarterly or Semiannual Financial Statements
Restructuring moves into overdrive in third quarter (E)

Disclosure announcement transmitted by euro adhoc. The issuer is
responsible for the content of this announcement.
Results trend and balance sheet for first three quarters of 2002
(according to IAS)
The Austrian Airlines Group achieved a positive result (EBIT) of EUR
61.8m (2001: EUR -16.0m) in the period from January to September. The
Group’s profit before tax (PBT) was EUR 35.6m, compared to EUR -75.0m
in the previous year. Despite the fact that the number of available
seats was reduced by 2.3 % (available seats on scheduled services
were down by 9.4 %), the passenger volume of the Austrian Airlines
Group for the first nine months of 2002 increased by 1.6 % to
6,841,313 passengers carried. Vagn Soerensen, Chief Executive Officer
of the Austrian Airlines Group, made the following statement at this
interim stage of his restructuring programme: "We have been working
to implement long-term restructuring measures in operations and to
make ongoing improvements in profitability and corporate value, and
are currently fully on course to do precisely that. Such a powerful
interim result has also enabled the Group to reduce its liabilities
by EUR 136.3m. This has massively increased our ability to overcome
crises and our options for future action."
Significant improvement in result
The Group strongly improved its result in the first nine months of
the year. EBITDAR reached EUR 377.6m, compared to EUR 205.8m in the
first nine months of 2001.
After falling to a level of EUR -16.0m the previous year, the Group’s
EBIT bounced back to reach EUR 61.8m. Profit before tax in the first
three quarters of 2002 was EUR 35.6m, following EUR -75.0m for the
same period in 2001.
Thomas Kleibl, Chief Financial Officer of the Austrian Airlines
Group, expanded upon the revision of the results forecast for the
full year: "Our robust traffic performance in the third quarter,
associated gains in market share and positive effects on income have
enabled us to revise our forecast for the year upwards to between EUR
35m and 40m (EBIT). It is because passenger volume in the airline
industry is traditionally lower in the fourth quarter that the
budgeted annual result is below the actual result for the first three
quarters of the year. If we are to continue implementing a lasting
turnaround at the Austrian Airlines Group, we must maintain the
strictest possible cost discipline and real dynamism in fine-tuning
our business model. We achieved our strong result out of the
operational business, since exchange rate gains of EUR 87.6m were
offset by aircraft depreciations of EUR 72.8m." being.
Summary of Austrian Airlines Group result in first three quarters of
2002
~
                                         1-9 / 2002 1-9 / 2001 +/- %
Revenue                             EURm 1,673.5    1,634.2    2.4
EBITDAR adjusted 1                  EURm   290.3      207.0    40.2
EBITDAR                             EURm   377.6      205.8    83.5
EBIT adjusted 2                     EURm    47.3       -19.3      -
EBIT                                EURm    61.8       -16.0      -
Profit before tax adjusted 2        EURm    13.2       -80.1      -
Profit before tax                   EURm    35.6       -75.0      -
Cash flow from operating activities EURm   428.2       157.8      -
Passengers carried                     6,841,313   6,735,596    1.6
Passenger load factor
(scheduled services)                   %    71.4       70.7     0.7P.
~
1) Adjusted for profits from the disposal of assets and for exchange
rate valuations at the reporting date
2) Adjusted for profits from the disposal of assets, exchange rate
valuations at the reporting date and revaluations of aircraft
Cash flow from operating activities increased again
Following lasting improvements in operating business and changes in
working capital (due to increased provisions for liabilities arising
from flight documents sold and not yet used), cash flow from
operating activities increased sharply from EUR 157.8m last year to
EUR 428.2m.
Cost-cutting measures continue according to plan 
Operating expenses in the reporting period reached EUR 1,780.6m, that
is EUR 80.5m or 4.7 % above those for the comparable period last
year. The increase is essentially the result of depreciations on the
reporting date in the value of aircraft awaiting sale; when adjusted
to account for such effects, expenses were down by EUR 12.9m.
Production cutbacks led to a significant reduction in expenses,
particularly in the area of variable costs. The implementation of
personnel cost savings continues according to plan. The Group-wide
voluntary salary waiver of 8 % was implemented for a period of one
year as at 01.01.2002 and 01.03.2002 respectively. By the end of
September, 850 of the 968 planned job cuts had been made, bringing
additional savings of 7 % of personnel costs.
Flight revenue improved strongly despite reduced capacity
Despite significantly reduced production (-2.3 % in total available
seat kilometers and -9.4 % in available seat kilometers on scheduled
services) flight revenue increased by 3.1 % to EUR 1,554.2m. Other
revenue fell due to a 6.1 % reduction in income from aircraft
leasing. Total revenue increased by 2.4 % or EUR 39.3m to reach EUR
1,673.5m. The operating revenue of the Austrian Airlines Group rose
from EUR 1,684.1m the previous year to EUR 1,842.4m in 2002.
The Austrian Airlines Group is on course to continue the improvements
already made in the area of operations. The positive structural
consequences were a result of the reduction in long haul capacities
in favour of short and medium haul production with higher yields.
Offensive marketing and product strategy proves a lasting success
The strategic reorientation of the production programme launched in
the 2002 summer schedule enabled the Group to improve the connection
quality of its network by 23 % (number of possible connections) and
to increase market share at its Vienna hub from 61.2 % to 66.2 %
(Group passengers as a percentage of total scheduled and charter
passengers using Vienna Airport).
Chief Commercial Officer Dr. Josef E. Burger made the following
statement on the continuing marketing offensive: "By tightly managing
capacity, making structural improvements to our route programme and
taking action more rapidly and flexibly, we have succeeded in raising
our yield and winning additional market share on routes in Western
and Eastern Europe and Asia. As a result, our overall performance has
been strongly above the industry average during the key summer
months. I have no doubt this situation will continue."
Consolidation of the regional flight segment was completed in
October, as Rheintalflug was integrated into Tyrolean Airways. The
repositioning of the regional flight segment as part of the scheduled
flight programme is one of the central planks in the development of a
new brand architecture for the Austrian Airlines Group, due to be
presented at the beginning of 2003. Both plans will serve to develop
the market presence of the Austrian Airlines Group more clearly, and
to realise the Production Company Concept more consistently in terms
of its external visual presence.
Dr. Josef E. Burger had the following to say about the Group’s
ongoing innovations in the fare sector: "Our new fare concepts for
domestic flights, regional traffic to Germany, traffic between Vienna
and Altenrhein and Switzerland, and flights to Belgium and the
Netherlands are beginning to take effect. Both our business clientele
and holiday travellers are welcoming the new concepts. This is just
the beginning, however - we shall not stop innovating. The Austrian
Airlines Group intends to meet the new competition in the airline
industry head on!"
Marketing of overcapacities
Total investment volume in the first three quarters of 2002 was
216.3m, that is 29.8 % or EUR 92.0m lower than in the comparable
period in 2001. Based on non-alterable, long-term purchase
agreements, one Canadair RJ, one Dash 8, one Boeing 737 and one
Boeing 777 have been newly integrated into the fleet since the
beginning of the year. Other aircraft deliveries originally planned
for 2002 have been postponed by an average of one to two years, in
intensive negotiations with manufacturers Currently existing
overcapacity is either being reduced where possible or will be
profitably deployed again once markets have recovered.
By October 2002, concrete agreements had been concluded for the sale
of one Challenger CL600, two Dash 8 and one Boeing 737. One Boeing
737, three Dash 8 and two business jets of the Learjet 60 type are
currently leased out. Chief Operations Officer Dr. Walter Bock made
the following comment on the current market position: "The market for
used aircraft remains sluggish, however, the excellent condition of
our fleet is an invaluable asset for possible further aircraft sales
and leasing."
end of announcement        euro adhoc 19.11.2002

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Branche: Air Transport
ISIN: AT0000620158
WKN: 062015
Index: ATX, ATX Prime, WBI
Börsen: Wiener Börse AG / official dealing