Air Berlin Seeking Wider Cost-Savings Plan, Union Says

Air Berlin Plc (AB1), Europe’s third- biggest discount airline, is seeking in excess of 10 percent more in savings than previously announced in an effort to return to profit, according to a Ver.di labor union official.

The carrier is pushing for 450 million euros ($611 million) in cost reductions and extra revenue, with half of the figure coming from reorganizing routes and flying fewer planes and half from lowering costs for personnel, supplies and services, the official said today in an e-mail. That compares with a 400 million-euro target for the earnings-improvement program outlined by the Berlin-based company on Jan. 15.

Top executives are volunteering to receive a 10 percent salary cut, and managers at the next level of the hierarchy would be asked to forgo 5 percent of pay, the Ver.di official said. Mathias Radowski, an Air Berlin spokesman, declined to comment on any proposals because the airline is in talks with unions about the program.

Air Berlin, part-owned by Abu Dhabi-based Etihad Airways PJSC, hasn’t been profitable since 2007. The savings program for 2014 set out two weeks ago includes eliminating 900 jobs, or almost 10 percent of the workforce, and cutting the fleet by 10 percent to 142 aircraft. The project is the first undertaken by the carrier since Wolfgang Prock-Schauer took over as chief executive officer on Jan. 7.

Proposed service reductions include eliminating bases at seven smaller German cities, while employees are being asked to give up the so-called 13th month of pay common in the country’s labor market, the Ver.di official said. The jobs to be eliminated would include 250 flight attendants, 160 technicians, 145 ground-handling posts and 110 pilots, as well as 120 positions at the Berlin headquarters, the official said.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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