The AUA will be saved by the state, but as protection against low-cost airlines such as Wizzair and AUA, tickets will cost at least 40 euros in the future. The ticket tax is to be increased immediately to 12 euros and even to 250 euros on routes less than 30 kilometers.
The Lufthansa Group has managed to land a total of 600 million euros for its subsidiary Austrian Airlines. The Republic of Austria will transfer 150 million euros as "damage cover". The parent company Lufthansa will provide an amount in the same amount. 300 million euros will be taken out in the form of a bank loan. This must be repaid by 2026.
The federal government is linking the granting of 150 million euros “to cover damage as a result of the COVID-19 crisis” to ecological requirements, location guarantees and other securities. The entire aid package is dependent on state aid in Germany for Lufthansa, the approval of all committees and the approval of the EU Commission.
Federal Chancellor Sebastian Kurz said that Vienna will grow as fast as Munich and Frankfurt in the future. The Lufthansa Group has committed itself to this. According to him, the 150 million euros that the state is making available come directly from the tax pot.
“Austrian Airlines was and is an elementary part of the Lufthansa Group's multi-hub strategy. With this package and in combination with the improved framework conditions of the Austrian aviation system partners, Austrian Airlines can rebuild the hub in Vienna after the crisis and connect Austria with important destinations in Europe and around the world ”, says Carsten Spohr, CEO of the Lufthansa Group.
According to Austrian Airlines, short-haul flights will increasingly be shifted to rail in the future. However, it should be ensured that the federal state airports are connected to at least one Lufthansa hub. If the ground travel time is less than three hours, flights should be omitted. By 2030, the inner Austrian carbon dioxide emissions are to be halved. To this end, fuel efficiency is to be increased by 1,5 percent per year, so that by 2030 there will be a reduction in CO2 emissions of 30 percent.
Government wants to provide protection aid with anti-dumping regulation
Vice Chancellor Werner Kogler also announced that there will be anti-dumping regulations for flight tickets in the future. The aim is to avoid a further price war in the cheapest segment. According to him, taxes, fees and charges should at least be reflected in full in the ticket price in the future. This is an indirect means of helping the AUA to compete against Wizzair and Lauda.
Transport Minister Leonore Gewessler announced that in future flight tickets must be sold at least at the price of taxes, fees and ticket levy. The approximate minimum price should be around 40 euros one way. Europe-wide sees itself as a pioneer in this regard. The ticket fee should not be raised in the coming year, but immediately to 12 euros. Another new feature is that for flights that are operated on a distance of less than 250 kilometers, even 30 euros will be charged in ticket tax.
In order to monitor compliance with all requirements, ÖBAG is given the opportunity to send two people to the board of the Austrian Aviation Private Foundation (ÖLP), the majority owner of Austrian Airlines (via the Austrian Aviation Holding). One of these two people will also have a seat on the supervisory board of Austrian Airlines AG. According to Finance Minister Gernot Blümel, fines will be incurred if the requirements are not met.
After Austrian Airlines originally registered EUR 767 million in liquidity requirements with the COVID19 Federal Financing Agency (COFAG), the earlier restart and the successful implementation of liquidity-preserving measures on the part of the management now only enables a lower financing requirement of EUR 600 million. This amount was also confirmed by the auditor PwC.
Blümel: If the loan is not repaid, the carrier becomes the property of the state
300 million euros of this will be provided as a loan through bank financing. Another 300 million euros from the state and Lufthansa are to strengthen equity. This is not only intended to ensure the traceability of bank financing, but also to ensure investment in sustainable technologies in the medium term. The existence of Austrian Airlines as a system-relevant partner for the Vienna hub can thus be ensured.
The loan of 300 million euros is to be provided by an Austrian banking consortium consisting of Erste Group, Raiffeisenbank International, BAWAG and possibly other banks, with Erste Group also acting as a coordinator. After completion of the necessary examination steps and all approvals, 90 percent of the loan is guaranteed by the Republic of Austria via COFAG. According to Finance Minister Gernot Blümel, if the loan is not repaid, the carrier would in fact become the property of the state.
Employees forego wages
Another very important part of the Corona aid comes from the airline's employees: the almost 7.000 employees shoulder a cumulative amount of around 300 million euros in the crisis, by foregoing salary, among other things. The share of the more than 1.000 business partners and suppliers of Austrian Airlines is just as significant: in new agreements, the order volume was reduced by more than 150 million euros, partly through new agreements, partly through waiver.
“I am very relieved and grateful that together we have succeeded in getting Austrian Airlines ready to go again. Austrian Airlines will take off on the ground again after almost three months from June 15, 2020 and will slowly ramp up flight operations in accordance with international travel guidelines. We look forward to welcoming passengers on board again soon ”, said AUA General Director Alexis von Hoensbroech.