Austrian carrier Austrian Airlines AG, or AUA (AUA.VI), Thursday said its third-quarter net loss widened considerably as a decline in passenger numbers and restructuring costs hit its bottom line.

The carrier, which was recently acquired by Deutsche Lufthansa AG (LHA.XE), said it is on the right path to return to profitability. It didn't provide full-year guidance, but retained its previously stated target of producing a positive cash flow in 2010.

"In the upcoming years, we also want to generate a positive earnings before interest and taxes and thus be in a position to earn the funds required to finance our capital expenditures," Austrian Airlines said. It said extensive costs cut and restructuring measures are "beginning to take hold."

"However, we should not fool ourselves. The crisis is brutally manifesting itself. The earnings figures relentlessly show our weaknesses. They demonstrate that we still have a lot of work ahead of us in order to be able to successfully restructure the company and make it profitable," Austrian Airlines' Co-Chief Executives, Peter Malanik and Andreas Bierwirth said.

Earlier Thursday, Lufthansa said it expects to make a full-year net loss and that recently acquired Austrian Airlines and British Midland Airways, or bmi, will contribute to losses in the fourth quarter.

Austrian Airlines' third-quarter net loss totaled EUR75.7 million from a loss of EUR16.4 million a year earlier.

Third-quarter sales fell 20% to EUR557.7 million, as overall flight demand remained very weak, and Austrian Airlines shaved off non-profitable capacity, mainly in its long-haul segment.

Austrian Airlines didn't provide specific information on the one-off charges incurred in the third quarter. For the first nine months, special charges, which included impairment losses on aircraft and restructuring provisions totaled EUR191.6 million, it said.

Excluding these special items, taxes and interest, Austrian Air's earnings swung to a profit in the quarter, it said. Core earnings, defined as earnings before interest and taxed and adjusted for special items, totaled EUR24 million, up from a loss of EUR0.3 million a year earlier, mainly helped by company-wide cost cuts.

In comparison, the unadjusted EBIT loss was EUR63.8 million in the third quarter, wider from a loss of EUR12.3 million a year earlier.

Austrian Airlines has presented a comprehensive plan to overhaul cost and reposition of the airline and eventually swing it back to profitability in coming years. It entails cost savings of EUR305 million a year, of which the EUR80 million will be achieved through synergies with Lufthansa. It plans personnel cost cuts of EUR150 million by 2014, it has said.

Lufthansa won the tender for the Austrian state's 41.6% controlling stake in Austrian Air last year, and finally closed the deal in September. With an additional public offer of EUR4.49 a share, Lufthansa's stake has gone up to just above 90%. Last week it said it plans to squeeze out the remaining shareholders at a price of EUR0.5 a share.

At 0932 GMT, Austrian Airlines shares traded up 10%, or EUR0.22, at EUR2.42.

-By Flemming E. Hansen, Dow Jones Newswires; +43 1 513 69 22 10; flemming.hansen@dowjones.com