Austria has revived plans to privatise it flag carrier in a move that will boost its expansion eastwards.
The government is to relinquish its majority holding Austrian Airlines after it decided not to participate in a Sch3 billion ($240 million), capital raising programme. The state will remain the largest single shareholder but its stake will drop to 39% with the proportion on the Vienna bourse jumping to 25%.
The date of the share issue is not yet fixed, but an Austrian Airlines spokesman says it is scheduled for "sometime in the spring". Swissair's 10% holding, ANA's 9% and Air France's 1.5 % stake will not be affected.
The cash raising programme comes as Austrian launches one of the most ambitious fleet renewal and network expansion programs in its history. Last month, the carrier ordered seven A320s at a cost of Sch7 billion, adding to two A321s it has just taken into its fleet, and one A340 and one A320 which are due to be delivered later this year.
The renewal plans will give its fleet an average age of five years - the European average is 8.7 years. Extra aircraft are due to arrive this year at Lauda Air and Tyrolean, both members of the Austrian Airlines Group, leaving it with more than 20 different aircraft to choose from.
"Flying Fokkers to Minsk and Kiev is just about the right capacity. It would not make sense to fly there with an A310 or an A340 so we have the flexibility to use the right plane for these routes," says the spokesman.
Austrian's renewal programme is needed to service its network expansion, to which 17 destinations were added in 1998, with four more to be launched this year. The core of its expansion is to eastern Europe and central Asia although by May, Montreal will also be added.
Added destinations in 1998 include Astana in Kazakhstan, Kharkov in Ukraine, Tbilisi in Georgia and Anapa in Russia, while this year, Atyrau in Kazakhstan, Baku in Azerbaijan and Yerevan in Armenia will be added.
"We are looking for destinations that are of economic importance," said the spokesman. "Seaports and destinations where big US oil firms are operating, where there is good business traffic and where the competition is not that tight yet." Austrian serves more destinations and has a greater share of traffic to eastern Europe and the CIS than any other Western airline out of a singe hub - Lufthansa is bigger but operates out of both Frankfurt and Munich.
Austrian's passenger growth was running at double figures last year, and profits have grown by 72%, a good turn around, say Austrian airline analysts. "With a prudent network expansion programme in eastern Europe, much of its potential is still untapped," says a recent report from Erste Bank.
Source: Airline Business
