Austrian Air CEO:Must Turn Profitable By 2011 To Ensure Growth

Austrian Airlines AG plans to return to profitability in 2011 by replacing smaller aircraft with larger ones, making further cost cuts, and increasing productivity, the company's two co-chief executives said Tuesday.

"We have to reach positive operative earnings by 2011," said Chief Executive Andreas Bierwirth, speaking to journalists.

The airline, which was recently taken over by German airline Deutsche Lufthansa AG (LHA.XE), has suffered large losses in later years due mainly to high jet fuel prices, and lately, declining passenger volumes.

Austrian Air's other CEO, Peter Malanik, cautioned that the flight market of earlier won't return with the end of the current economic crisis. The pressure from low-cost carriers will continue to be high, and many business flyers will have changed to economy seats for good, Malanik said.

"We will have to reduce the price per seat significantly going ahead," Malanik said. This will be achieved by targeting the high-passenger volume markets and replacing smaller aircraft, which carry up to 50 passengers, by larger airbus aircraft. This shift in the fleet is planned for next year, Malanik said.

Bierwirth said he believes the deterioating passenger trends of late found on Austrian Air's long-haul and Central and Eastern Europe flights have bottomed out.

"We have reached the low point in long-haul and CEE," Bierwirth concluded.

-By Flemming E. Hansen, Dow Jones Newswires; [phone]; [e-mail]