Austrian Airlines no longer expects to meet its objective of generating an operating profit in the current year.
The Lufthansa subsidiary had planned to post positive earnings before interest and tax in 2011. However, after reporting a €68 million ($97.8 million) operating loss during the first quarter and scraping a €400,000 profit in the second quarter, the airline does not believe it will produce a positive result for the full year, said a spokesman.
The main reasons for the lower than expected performance are the upheavals in the Middle East region, a traditional market for the Vienna-based carrier, and the earthquake in Japan in March.
Around 20% of Austrian's available seat kilometres are on flights to and from these destinations.
While traffic on the route to Tokyo has since recovered, the company has cut 40% of its capacity to the Middle East for the current summer schedule.
However, the cost effects will not be revealed until the traffic figures for the third quarter have been finalised.
The extent to which this will impact Austrian's winter 2011/12 schedule, which begins in November, is not yet clear. The spokesman said the new schedule is currently being determined.
The weakness of the dollar against the euro has affected Austrian's business on routes across the North Atlantic. While capacity cuts are "currently not planned", the company would be able to "respond quickly", he said.
Traffic within Europe had "improved noticeably" and partly compensated for the declines to the Middle East, he added.
The company now hopes to achieve a full-year operating result that will be "significantly better" than the nearly €65 million operating loss in 2010.