Austrian Airlines failed to meet its target of returning to profitability in 2011, reporting an operating loss of €59.4 million ($77.5 million) for the year.
The carrier warned in August that it was unlikely to meet its objective of generating an operating profit for the year, after it posted a €68 million operating loss during the first quarter and scraping a €400,000 profit in the second.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) declined by 35.4% to €109.9 million from €170 million in 2010. Total operating income remained flat at €2.2 billion.
The carrier says the unexpected decline was largely due to the earthquake in Japan and upheavels in the Middle East, higher oil prices and the continuing impact of the global financial crisis on passenger traffic.
Austrian's passenger traffic grew 1.7% in 2011 against a capacity increase of 5.9%, leading to a load factor of 73.8%, down 3.1 percentage points.
The carrier's CEO, Jaan Albrecht, said: "The crises of the past year have relentlessly shown our structural deficits.
"This is why it was so urgently necessary for us to set up our work programme in January, since when we have been working hard to remove these deficits. We must succeed in taking the company back into the profit zone once and for all."
Austrian's work programme identifies €180 million of potential cost reductions and revenue increases. It was last night given the green light from Austrian's parent company, Lufthansa.
The German carrier says it will support Austrian's efforts to restructure its flight operations with a conditions-based capital increase of up to €140 million.