Bloomberg News

Air Berlin Profit Jumps 4.5% as Reorganization Reduces Costs

November 14, 2012

Air Berlin Plc (AB1) said quarterly profit rose 4.5 percent, trailing analysts’ estimates, even as a reorganization helped reduce spending at Europe’s third-largest discount airline.

Third-quarter earnings before interest and taxes climbed to 101.2 million euros ($129.1 million) from 96.8 million euros a year earlier, the carrier said in a statement today. That missed the 116.8 million-euro average of five estimates compiled by Bloomberg. Revenue rose 1.4 percent to 1.4 billion euros.

“We are on the right track, but the journey is far from over,” Chief Executive Officer Hartmut Mehdorn said in the statement. “Our goal remains a return to profit next year.”

Air Berlin, 29 percent owned by Etihad Airways of Abu Dhabi, announced a second savings program last month to ensure it achieves a “positive result” in 2013. While a project set up last year to cut annual costs by 250 million euros exceeded targets, Europe’s worsening economy required additional measures, according to the Berlin-based carrier, which said earlier today it will specify goals for the program in coming weeks.

Deutsche Lufthansa AG, Germany’s biggest airline, has also undertaken an efficiency-improvement plan to save 1.5 billion euros annually by 2015. The Cologne-based company is eliminating as many as 4,500 jobs and moving all short-haul operations outside its Frankfurt and Munich hubs into the Germanwings low- cost brand.

Air Berlin dropped routes and reduced flights as part of the earlier cutbacks, scaling back seating by 2.2 percent, and closed airport bases in the German cities of Erfurt and Dortmund. Passenger numbers in October fell 5 percent to 3.18 million travelers, while the load factor, or proportion of seats filled, increased 1.3 percentage points to 81 percent, Air Berlin said Nov. 6.

This year’s target is for an annual loss before interest and taxes narrower than 87 million euros, Air Berlin said in August. While the airline said then that it anticipated “significant” profit in 2013, the company reiterated today that further efficiency measures are needed to ensure a 2013 profit. The existing cost-saving program will add 230 million euros to operating profit this year, Air Berlin said today.

To contact the reporter on this story: Alex Webb in Frankfurt at awebb25@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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