Air Berlin Making European Premium Push in Bid to End Losses

  • CEO says company beginning ‘far-reaching transformation’
  • Carrier trying to position itself in more lucrative segments

Air Berlin Plc is introducing business-class seats in Europe in a push to position the airline in a more lucrative segment of the market following years of losses.

The carrier will begin reserving the first row of German and European flights later this year for premium customers, who will enjoy priority check-in and boarding, fast-lane security and lounge access before flights, Air Berlin said in a statement on Friday. The new offering will also include restaurant-style, in-flight food service, with customers individually served at their seats instead of a standard offering from a trolley.

The switch is “the beginning of a far-reaching transformation,” Chief Executive Officer Stefan Pichler said in the statement. “We are making key strategic decisions that will pave the way to a sustainable future for the company and will clearly position Air Berlin in the premium sector. The new product will make us more attractive, particularly for business travelers.”

Pichler, who became Air Berlin’s fourth CEO in as many years at the beginning of 2015, is under pressure to deliver a turnaround after the carrier suffered seven annual losses in eight years. So far, he has not presented the broader strategy revamp that the airline flagged last year. 

Abu Dhabi-based Etihad Airways PJSC, which owns a 29.2 percent stake, is demanding progress after several bailouts. Competition is heating up in Germany as European discount leader Ryanair Holdings Plc adds more flights following the U.K.’s vote to leave the European Union and Deutsche Lufthansa AG beefs up its low-cost Eurowings arm.

Coupled with plans to increase frequencies to the U.S. by leasing three additional long-haul aircraft beginning next summer, the carrier appears to be shifting toward a business model closer to that of Etihad, which owns stakes in six airlines and is known for its $20,000 ultra-luxurious ‘Residence’ cabins. For economy class passengers, the airline is shifting to a buy-on-board concept and will stop serving complimentary refreshments on continental routes.

Apart from feeding long-haul destinations from its Berlin and Dusseldorf hubs, Air Berlin also serves tourist destinations and cities in Europe through a point-to-point network. 

Lufthansa currently is in talks to take over 40 of Air Berlin’s aircraft, including crews, people familiar with the matter told Bloomberg News last month. The move could help Germany’s biggest carrier beef up its low-cost offering, while allowing Air Berlin to focus more attention and limited funds on a premium product.

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