German Economy Online: Airline – Air Berlin before the break

Thursday, August 13, 2015

Airline – Air Berlin before the break – Süddeutsche.de

Air Berlin is facing a dramatic upheaval.
parts of the business could be divided, are thinned out and rebuilt the route network.
Air Berlin is expected to focus on the major airports and abandon branch lines.

analysis Jens Flottau , Frankfurt

Air Berlin CEO Stefan Pichler is known not to like on the mouth, but when it may concern to the key points of the proposed realignment, it is quite meekly. The he had once discussed with the Supervisory Board at the next meeting in the fall. And they do not want to run in advance, therefore, even though he has much of it obviously already decided for themselves. “That I can not do,” he says. Only this: “After the summer, the conversion starts.”

There are many indications that the periods of relative calm at Air Berlin are in a couple of weeks ago. If the Supervisory Board – that is the majority shareholder Etihad Airways – can make the installed spring new boss, it is for many people uncomfortable: parts of the company such as maintenance or administrative functions could be outsourced, the cheaper operating Austrian subsidiary Niki could completely after model of Euro Wings Lufthansa take on more routes, which are no longer profitable for the principal trade mark. Above all, one’s own route network is likely to be significantly thinned and rebuilt – the internal study is completed for several weeks. Humanly Air Berlin is at the end have clearly too many employees for the rest of the program and it will ask the question, how the company copes with the situation, to leave without incurring similar distortions as the competitor Lufthansa.

” Dialogue instead of class struggle “wants to introduce Pichler, but given the possibly massive cuts conflicts can hardly be avoided. Especially since the new boss has made since taking office on the first three management levels Tabula Rasa, a process is now complete “to 75 percent”. So there are still some department heads who have to fear for their jobs. The uncertainty is correspondingly large and business partners puzzle whether their contacts do not have anything to say or are soon gone. Many good people who were only thwarted by the old CEO Wolfgang Prock-Schauer, are already gone, says an Air Berlin connoisseurs.

=> “1.5″

model low-cost competition Lufthansa launches new pricing model

It is the biggest reform of the aviation group for decades. For the customer changes a lot.

many worrisome

Pichler and Schwierholz must try at the same time the balance sheet and operational to solve problem. And the economic results of the first half to make it clear that the company is marking time at best. Shareholders’ equity, which was minus 415 million euros already negative start of the year, has again decreased to minus 575 million euros. Schwierholz warns that this has “nothing to do with bankruptcy,” because it applies only to the group, but not the operating companies.

of concern must be that Air Berlin in the second quarter, the capacity already significantly has reduced by 7.1 percent, but the demand even more declined (by 7.6 percent). That is why the so-called yield, ie the revenue per revenue passenger, become even smaller. For the first six months, the important parameter is increased by 0.7 percent, albeit at still low levels. Revenue declined by two percent to 1.86 billion euros, the operating loss by seven percent less (175 million). The net result deteriorated even further (by 23 percent to 247 million), because the airline last year could einrechnen positive effects in hedging transactions.

In order to improve the situation, Pichler have and act its board quickly. Operationally, the crucial question how the future route network will look like. Pichler has already announced that Air Berlin focus on the major airports and secondary routes where no money is, is to give up. From strategy especially the Dusseldorf airport is likely to benefit, who already is the biggest base so far and a relatively strong business trip volume has. The long-haul connections apparently non-negotiable, because “our long-haul routes are in the overall picture remains positive.”