Budget Carrier Eurowings Forges Ahead

Eurowings, the de facto successor to Lufthansa’s tainted Germanwings discount carrier, is staffing up at its first non-German base in Vienna, in a bid to emerge from a troubled start.
The salary may be low, but the uniform is complementary. 

How should a startup airline market itself to prospective employees and passengers?

Lufthansa’s new discount carrier Eurowings, whose launch has been marred by embarrassing flight delays, a dearth of trained pilots and other glitches, is still struggling to figure that out.

Part of its answer was on display at a recent recruiting event held at a hip hotel in an even more hip district of Vienna. There, Eurowings chief executives Robert Jahn and Dieter Watzak-Helmer – appearing casually, without ties – sought to put a positive spin on an overwhelmingly negative narrative.

The good news: Eurowings, which last year announced its first non-German base at Vienna International Airport, is offering hundreds of new jobs. The Lufthansa subsidiary is seeking 400 flight attendants and 200 pilots.

The bad news for jobseekers: The low-cost airline is seeking low-cost employees.

Carsten Spohr wants the German national airline to use its discount brand to keep rival low-cost carriers at bay and to apply pressure to Lufthansa’s unionized workforce to accept concessions on compensation. Dieter Watzak-Helmer, Co-Chief Executive, Eurowings

Gross annual salaries for flight attendants start at just €21,000, or about $22,900. Salaries for co-pilots flying Airbus A 320 jets begin at €44,000. Salaries for flight captains start at only €78,000 – which is also less than it appears since Austria’s income tax rate is a whopping 50 percent for those making €60,000 or more per year.

But at least Eurowings employees do not need to buy their own uniforms.

“We offer our flight attendants complementary uniforms, which is not customary at low-cost carriers,” said Nicole Jung, director of cabin operations at Eurowings Europe, at the recruiting event in Vienna.

Despite the ongoing global oil glut, and plunge in prices for the foreseeable future, Eurowings does not plan to reduce its ticket prices.

“Our prices will hold steady,” said Mr. Jahn, somewhat defiantly.

Brent crude oil prices on Wednesday hit a 13-year low, as prices tumbled below $27 per barrel. The price of kerosene fuel used by airlines has been following the downward trajectory of the overall trend.

Regardless of prices, Eurowings has its work cut out to allay passenger concerns following its troubled launch. The airline’s performance on long-haul flights has been particularly vexing for customers. According to passenger rights group Fairplan, about 30 percent of long-haul flights operated by Eurowings between Christmas and mid-January experienced delays.

One recent flight returning from Cuba was delayed by nearly three days.

Eurowings’ turbulent start is a black eye for Lufthansa chief Carsten Spohr. In the face of strong opposition from within the company, he has advocated for the new budget carrier to integrate and largely replace Lufthansa’s tainted Germanwings brand after one of its pilots last March deliberately crashed an Airbus 320 jet in the French Alps, killing all 150 people on board.

Moreover, Eurowings is the cornerstone of the most comprehensive restructuring in Lufthansa’s history. Mr. Spohr wants the German national airline to use its discount brand to keep rival low-cost carriers at bay – either through competition, collaboration or acquisition – and to apply pressure to Lufthansa’s unionized workforce to accept concessions on compensation.

Over the past year, a series of strikes, however, have indirectly targeted Eurowings, placing pressure instead on Mr. Spohr to prove that Lufthansa can successfully operate a budget airline business.

At Wednesday’s recruiting event, Mr. Jahn and Mr. Watzak-Helmer declined to comment on Eurowings’ sales and earnings targets. In Europe, the carrier is operating at “between 70 and 80 percent” of capacity, Mr. Jahn said.

Eurowings’ base in Vienna is still under construction, as the discount airline prepares to add seven new passenger jets this year and 12 more next year.

But are they?

 

Austrian Airlines, another Vienna-based budget carrier owned by Lufthansa, is concerned that Eurowings’ expansion on its home turf could lead to a cannibalization of its business.

Although the first two aircraft to fly under the Eurowings banner from Vienna were staffed by crews from Austrian Airlines, and Austrian Airlines boss Jaan Albrecht initially said he was “delighted” about Eurowings, the two sister subsidiaries of Lufthansa are in stiff competition on some of the same routes, such as Vienna to Faro, a popular tourist destination in southern Portugal.

The affable Mr. Watzak-Helmer, however, rejects that.

“We don’t view ourselves as competition for Austrian Airlines,” he said.

 

Hans-Peter Siebenhaar is the Vienna correspondent for Handelsblatt. To contact the author: [email protected]