Air Berlin Plans Flights to Boston, Dallas in Turnaround Pushby
Airline to add flights to the U.S., Cuba from Dusseldorf
Air Berlin targets 310 million euros in earnings improvement
Air Berlin Plc will expand services to the U.S. and Cuba from its Dusseldorf hub as the unprofitable carrier’s latest restructuring effort emphasizes growth over cutbacks.
Germany’s second-largest airline will also tighten cooperation with American Airlines Group Inc., Etihad Airways and Alitalia. The goal of the changes is to boost earnings by 310 million euros ($333 million) by the end of 2018, the Berlin-based company said in a statement. Because of the new expansion, Air Berlin won’t completely carry out plans to reduce the workforce by almost 900 employees, the company said, declining to specify a new target.
“We have worked to achieve the right balance between initiatives aimed at increasing revenue and those aimed at reducing costs,” Chief Executive Officer Stefan Pichler said in the statement. “Even in this difficult economic situation, it is important for us to demonstrate to our passengers and partners ongoing improvements in the quality of our operations.”
Pichler, who became Air Berlin’s fourth CEO in as many years at the beginning of 2015, is under pressure to deliver a turnaround as the carrier is set to suffer its seventh annual loss in eight years. Abu Dhabi-based Etihad Airways PJSC, which owns a 29.2 percent stake, is demanding progress after several bailouts. Competition is also heating up in Germany as European discount leader Ryanair Holdings Plc adds flights while full-service carrier Deutsche Lufthansa AG beefs up its low-cost arm.
Air Berlin shares, which have fallen 16 percent this year, rose to as high as 0.95 euros, valuing the company at 110 million euros ($118 million).
San Francisco, Havana Routes
To stem losses, Air Berlin plans to fly more long-haul flights and will begin service this summer to Boston, Dallas, San Francisco and Havana from Dusseldorf, where it plans to strengthen its market-leading position. The carrier will also increase the number of weekly flights to New York and Los Angeles.
Overall, capacity next year will be steady, the company said. Air Berlin cut capacity 6.7 percent in the 10 months through October, and has scaled back its fleet from a peak of 170 aircraft in 2011 to 149 currently.
As part of a goal of doubling its share of revenue from corporate travelers over the next three years, Air Berlin plans to add full-flat seats to business-class cabins in A330 planes that will be reconfigured exclusively for long-haul service. Air Berlin will also better coordinate service with Alitalia, a fellow partner of Etihad.
Etihad’s help for the German airline has included a deal that enabled Air Berlin to post net income in 2012, its first profit at that level since 2007. The carriers have been entangled in a dispute with German regulators about code-sharing rights. Authorities in October gave the airlines until Jan. 15 to end their joint sales of seats and revenue sharing on some routes. Air Berlin called on the German government to approve the code shares. Without the approval, the carrier’s 8,000 jobs would be even more at risk, the company said.