Austrian Airlines' losses widen ahead of planned takeover

May 5, 2009, 8:03 GMT

Vienna - Austrian Airlines AG said Tuesday its net loss had widened to 88.1 million euros (117.3 million dollars) in the first quarter, as the carrier waits for the European Union to green-light its takeover by Deutsche Lufthansa AG.

Lower demand affected quarterly results, which fell further from a net loss of 60.4 million euros in the first three months of last year.

The Austrian flag carrier deepened its operating losses by nearly 57 per cent year-on-year, posting 70.3 million euros of negative adjusted EBIT (earnings before interest and taxes).

As demand fell not only on long-haul routes, but also in the airline's core market in Central and Eastern Europe, sales dropped by 16.5 per cent to 438.8 million euros, while the passenger capacity utilization rate went down by 4 per cent.

'The world economic crisis, recession in Europe and the most serious economic downturn seen in the post-war period in Austria have all ensured that the start to the 2009 financial year has been difficult in the extreme,' said Andreas Bierwirth, one of the carrier's two chief executives.

The company has started implementing a cost-cutting package worth 225 million euros, including short working hours.

The planned takeover by German carrier Lufthansa does not only hinge on approval from the European Commission.

The deal can only be closed if Lufthansa secures control of 75 per cent of Austrian Airlines stocks by purchasing the shares held by the Austrian state as well as those owned by corporate and individual shareholders.