Work Programme: Austrian Concludes Transfer from Flight Operations into Tyrolean

Supervisory Board gives green light for "Plan B"

• Joint flight operations of Austrian Airlines and Tyrolean
• 220 million euros in savings secured as a result

The Supervisory Board of Austrian Airlines today concluded the planned transfer of the company's flight operations into its subsidiary, Tyrolean Airways. For legal reasons, the earliest possible date that this operation transfer can take place is 1st July 2012. With this decision the 220 million euro restructuring programme has been formally sealed. The aim of the programme was to bring the country's largest domestic airline back into profit.

Austrian Airlines CEO Jaan Albrecht said the following: "We have taken a decision today, that releases Austrian Airlines from inherited structural burdens. It also gives us a perspective on the future of aviation, because we will be organised in a more competitive way."

For customers nothing will change as a result of the transfer of flight operations: Austrian Airlines will remain Austrian Airlines - with a fleet of 77 aircraft serving 130 destinations around the world. For the employees of Austrian Airlines flight operations, who are 600 pilots and 1,500 flight attendants, nothing will change in terms of the workplace or actual salary. This is because, the savings should be achieved by means of level salary increases. Albrecht said the following: "Our Boeing 777 will still be flying to New York and Beijing tomorrow. And I would prefer to have the same crews on board. Because they are professional, competent and dedicated crews."

One flight operations for Austrian Airlines and Tyrolean

The next step is to integrate the Austrian flight operations into Tyrolean. In March, a project organisation was started with experts and managers of both companies. The aim of the working groups is to organise joint flight operations without a duplication of efforts by the end of the year. Both locations, Vienna and Innsbruck, are part of the future concept in all cases.

An overview of the work programme:

• Staff: In the work package "Modernisation of Collective Agreements" an agreement was found with the personnel workers´council of the Ground staff and the GPA (Union for private employees). Part of this are a zero growth wage agreement for 2013 and an agreement about the exit from the current pension fund model. Intensive negotiations with the personnel workers´council were lasting until the very last minute. Unfortunately no agreement has been reached. Therefore the transfer of flight operations into the subsidiary Tyrolean will now be realised. With the cost level of Tyrolean Airways, Austrian Airlines has a forward-looking and competitive basis for growth.

• Route network and fleet harmonisation: A new flight schedule with a strategic orientation to our domestic market of Austria and strong eastern markets has been developed. The removal from the fleet of eleven medium-haul aircraft of the type Boeing 737 and the acquisition of seven Airbus A320 is underway. Essential here is that suitable aircraft types are found that allow us to carry out the necessary technical requirements, such as adjustments to the engine or cabin, as cost-effectively as possible. The retraining of pilots began back in March. This is being flexibly adjusted, depending upon the time of the successive fleet harmonisation. The "retraining pool" includes pilots of the B737 and copilots of the Fokker fleet.

• Location: An agreement has been signed with Vienna Airport to secure the common future of the two organisations, and to strengthen the development of transfer- and long-haul traffic. Overall, this should serve to expand the Vienna hub and the long-haul product being offered at the location. A good basis for doing this has been created with the new Austrian Star Alliance Terminal, which will go into operation in June 2012. In the field of handling, too, savings potentials have been identified, and the framework conditions for a long-term agreement have been defined.

• Costs & revenues: Many of the business partners and suppliers want to participate in the future concept of Austrian Airlines and support it in adapting the conditions. With an extension of contracts and cheaper conditions with more than 60 suppliers it was possible to save substantial amounts, running into millions. The revenue side includes the expansion of corporate customer business, through cooperations with Lufthansa Group and partners within Star Alliance.

Austrian Airlines

Austrian Airlines is Austria's largest carrier and operates a global route network of round 130 destinations. That route network is particularly dense in Central and Eastern Europe: with 44 destinations, Austrian Airlines operates the densest route network into this region served by a single airport. Thanks to its favourable geographical location at the heart of Europe, the company's hub at Vienna International Airport is the ideal gateway between East and West. Austrian Airlines is part of the Lufthansa Group, Europe's largest airline group, and a member of the Star Alliance, the first global alliance of international airlines.

Owner. Editor. Reproducer: Austrian Airlines AG. Corporate Communications public.relations@austrian.com.
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