Austrian Airlines has drawn up an immediate action plan aimed at reversing crippling losses at part-owned affiliate Lauda Air following the conclusion of the flag-carrier's long-running battle with Lauda founder and former chairman Niki Lauda.

With the smaller carrier under the management of new executive chairman Ferdinand Schmidt after Lauda's resignation, Austrian has unveiled plans for a group restructuring, including the "complete reorganisation" of Lauda Air, which it claims will yield synergies worth Sch1 billion ($64.5 million)a year by 2002.

The group restructuring will see Lauda and regional carrier Tyrolean Airways reduced to subsidiary companies of Austrian, with the latter taking sole responsibility for group strategy, corporate finance, procurement, network management and global sales, advertising and customer service.

Austrian says the revised structure should deliver lasting profitability through "utilisation of all potential synergies" and will "accelerate decision-making". Tyrolean and Lauda will be controlled by Austrian as separately branded operating units, responsible for regional and charter, and scheduled leisure routes, respectively. The reorganisation should be completed by the end of 2001.

Niki Lauda's resignation followed a public battle with Austrian co-chief executives Herbert Bammer and Mario Rehulka over Lauda Air's losses as it struggled with high fuel prices and the strength of the US dollar.

Austrian owns 36% of Lauda but is negotiating to buy part or all of Lufthansa's 20% stake, and plans to exercise an option to buy a further 20% from Niki Lauda in July. Austrian says its group should still end the year in the black.

Source: Flight International