Austrian Airlines Group announced its half-year financial results yesterday and revealed that it will not achieve a balanced adjusted EBIT this year as planned owing to "continued high kerosene prices that exceed our budgetary assumptions, already set high as a precautionary measure, and because of the negative consequences of the capacity bottlenecks that have emerged at Austrian air traffic control since spring," according to CEO Alfred Oetsch.

AAG's six-month loss narrowed to 61 million (US$77.1 million) from 79 million in the first half of 2005 but its quarterly loss of 3.9 million was a reversal from a 3.4 million profit in the second quarter last year.

Quarterly operating revenues climbed 9.9% to ?694.7 million and expenses rose 5.5% to ?685.6 million. Adjusted EBIT nearly tripled to 6.1 million from 2.1 million. For the semester, operating revenue increased 13.2% to 1.26 billion while expenses grew 7.9% to 1.3 billion and adjusted EBIT narrowed to a 47.8 million loss from a ?64.1 million loss.

"We saw increase in yields and respectable growth in the first six months, but that's not enough," Oetsch said during a media briefing, adding that the company must take extensive action "otherwise AAG has no chance."

The airline will hold talks with unions representing flightcrew and ground staff with the hope of revamping labor agreements by the end of September. "We have to be more flexible in time and money," Oetsch said. No details concerning the carrier's objectives were divulged.

AAG confirmed its intention to end its nine-times-weekly services to Australia by March (ATWOnline, July 21). The move could include en route destinations Singapore and Kuala Lumpur as well. High fuel prices made the Australia routes uneconomical and the airline does not think the current 80% load factor can be improved. It also may close one of its three North American destinations (New York JFK, Washington Dulles and Toronto). It said it will focus on serving fewer destinations with more frequencies and that every route in the network will be investigated. It also will evaluate whether or not to maintain its relationship with its Lauda Air subsidiary.

CFO Thomas Kleibl said the company will not release a financial forecast for 2007.