Loss-making Austrian Airlines says it will cut costs

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Austrian Airlines (AUA) will unveil in January a new cost-cutting plan in order to return to profit in what will be a difficult 2012, the head of parent company Lufthansa said on Wednesday.

"AUA is some distance away from its profit target, and next year many people expect a difficult year for the airline industry," the German flag carriers's chief executive Christoph Franz told Austrian radio.

"Despite great efforts and progress made by AUA in improving its competitiveness, it is not enough. A second savings programme is needed," Franz said after a meeting of the Star Alliance group of airlines in Addis Ababa.

Lufthansa bought Austrian in September 2009 and carried out a restructuring involving the loss of 600 jobs, but in October the unit said it would not manage to post an operating profit this year.

Austria, which employed 6,800 people at the end of September, "needs money, but not only. It also needs fair competition in its domestic market, something that doesn't exist today," Franz said.

© 2011 AFP

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