Lufthansa considers redeployment of Embraer jets to Austrian Airlines

BERLIN, Feb 23 (Reuters) - Lufthansa is considering shifting some of its Embraer (Stuttgart: EMY.SG - news) jets to its Austrian Airlines unit as replacements for the carrier's ageing fleet of Fokker regional jets.

Lufthansa is trying to cut costs to compete better with fast-growing Gulf carriers and low-cost rivals such as Ryanair and easyJet and last week told staff that expansion of its core business depends on cost cuts.

In an internal letter to staff this month Lufthansa that it was examining how and where its regional Embraer fleet, currently in use at its CityLine unit, could be deployed in the most cost-effective manner

"Given the higher unit costs incurred by this aircraft type compared, for example, with the (Airbus) A320, we urgently need to revise its operational scope," the airline said in the memo.

Austrian Airlines currently operates 21 Fokker regional jets and is looking to replace them by 2018 or 2019.

It had looked at buying Bombardier (Toronto: BBD-A.TO - news) 's CSeries aircraft, but parent Lufthansa has now given it a new option with the possibility of taking some Embraer 195 jets from CityLine, a spokesman for the Austrian carrier said on Monday.

Both Austrian Airlines and parent Lufthansa said no decision had yet been taken.

Austrian's sister carrier Swiss has ordered 30 CSeries jets from Bombardier, which this month said it needed to raise $2 billion in new debt and equity as it revealed more cost overruns in the CSeries programme.

Lufthansa said in its internal letter that its aim is to keep as many jobs as possible at CityLine by using CRJ900 aircraft that are being replaced by Airbus A320s at its Eurowings business.

(Reporting by Victoria Bryan; Editing by David Goodman)