The Austrian Ryanair subsidiary already missed its downward revised earnings target. Lauda is currently losing almost two million euros a week and is therefore starting an austerity program.
At least one constant runs through the still young history of Lauda. Despite increasing passenger numbers and rapid fleet expansion, every budget has so far been missed. In the first business year, the mother Ryanair originally expected a loss of 100 million for her Austrian subsidiary. In fact, the minus in 2018/19 was 139.5 million euros.
For the business year 2019/20, which will end at the end of March, the first one was forecast in Dublin strong improvement to minus 50 to 0 million, However, management had to correct this forecast last October. It will probably lose between 70 and 75 million euros, it was said at the time. That too was still too optimistic. The loss will be around 90 million, Lauda boss Andreas Gruber announced last week in a letter to the employees that is available from aeroTELEGRAPH.
No wage increases
Gruber blames the difficult conditions in the two main markets of Austria and Germany for the worsening of the results. The price war with Eurowings and Austrian Airlines means that average ticket revenues are around 15 euros lower than budgeted. Therefore, one is currently losing “almost two million euros a week”. In October, Ryanair boss Michael had O’Leary a weekly minus of a million spoken at Lauda.
Because the results are so bad, Gruber announces an urgent savings program to the Lauda staff. Firstly, the current collective agreement for all new appointments will be suspended from January 1st. Secondly, there will be no wage increases as of April 1st.
All costs under the microscope
But that’s still not enough. With immediate effect, you will take a close look at all of the company’s costs, says Gruber. All expenses that are not necessary to get the passengers to their destination “safely, reliably and on time” would be reduced or eliminated, the Lauda boss wrote in the letter. The current losses would be borne by Ryanair, but that could not go on forever, he explains.
Despite the difficulties, the plan continues to expand the Lauda fleet to 38 aircraft, hire 300 new pilots and flight attendants, and expand the bases in Vienna, Palma and Zadar, Gruber continued. At the same time, attempts are being made to hold the bases in Düsseldorf and Stuttgart – against the aggressive competition of the Lufthansa subsidiaries, which according to the Lauda boss offer prices that do not cover costs. To achieve this, one has to work together, Gruber summons his team.