Bloomberg News

Air Berlin Names Strategy Chief Prock-Schauer as Chief

January 07, 2013

Air Berlin Plc (AB1) appointed Wolfgang Prock-Schauer, the former head of U.K. carrier BMI, to succeed Hartmut Mehdorn as chief executive officer, ending 16 months of interim leadership at Europe’s third-biggest discount airline.

Prock-Schauer, a 56-year-old Austrian who had been working as Air Berlin’s head of strategy and planning since October, becomes CEO with effect from today, while Mehdorn will remain on the management board, the German company said in a statement.

The move comes as Air Berlin struggles to return to profit after consecutive annual losses since 2008. Prock-Schauer had led BMI, which was also unprofitable, from 2009, leaving after the Deutsche Lufthansa AG unit was sold to International Consolidated Airlines Group SA. He has also worked in India.

“Prock-Schauer has decades of experience in different regions going for him, and Air Berlin has made progress on cost cutting already,” said Sebastian Hein, an analyst at Bankhaus Lampe. “I can imagine he’ll be successful, but it’ll be a Herculean job, one of the most difficult of his career.”

Air Berlin traded 2.1 percent lower at 1.53 euros as of 10:14 a.m. in Frankfurt after earlier adding 1.7 percent. Hein, based in Bielefeld, Germany, has a “sell” recommendation on the stock, which he expects to fall to 1.50 euros within a year.

Routes, Jobs

Under Mehdorn, who had held the title of interim CEO since September 2011, Germany’s largest airline behind Lufthansa has been closing routes and pondering job cuts after the economic slump pushed other short-haul operators to collapse.

The Berlin-based company adopted a new turnaround program, dubbed Turbine 2013, in October as earnings come under additional pressure amid competition from larger low-cost operators Ryanair Holdings Plc (RYA) and EasyJet Plc. (EZJ)

Abu Dhabi-based Etihad Airways, which holds a 29 percent stake in Air Berlin, also agreed to buy 70 percent of the discount specialist’s Topbonus frequent-flier program for 184.4 million euros ($240 million) last month in a transaction that should help deliver a first annual profit since 2007.

“Air Berlin is facing huge challenges,” Prock-Schauer said in a statement. “We must continue to push our process of change forward rapidly to become lean and smart.”

Prock-Schauer is a graduate of the University of Economics and Business Administration in Vienna, according to the website of the Star Alliance airline group, of which he was chairman between 2002 and 2003.

The executive began his career at Austrian Airlines in 1981 and spent six years as CEO of Jet Airways (India) Ltd. prior to his move to BMI, which was absorbed by British Airways following the sale to IAG.

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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