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Business

Air Berlin downsizing reaps rewards

German carrier Air Berlin has been able to boost its efficiency despite carrying fewer passengers in 2012. The struggling airline needs to downsize its capacity amid fierce low-cost competition and rising fuel prices.

Air Berlin was able to increase its capacity utilization by 1.6 percent in the course of 2012, in spite of fewer passengers who were flying with the airline, Germany's second biggest carrier announced Wednesday.

Last year, the airline closed unprofitable routes and downsized capacity by 12 percent under a cost-cutting program aimed at making the first profit ever in its six-year history as a publicly listed company.

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Global airlines face growing turbulences

The airline has been squeezed by high debt due to rapid expansion in its early days, and has been faced with cut-throat competition from budget carriers. In addition, rising air taxes in Germany and higher fuel costs have weighed heavily on earnings.

Air Berlin didn't provide earnings figures on Wednesday, but said the efficiency boost was reached although passenger numbers had dropped 5.5 percent last year to 33.3 million, or about 2 million fewer customers.

In the month of December, capacity utilization even jumped to 77.8 percent, which was 3.1 percent higher than during the same month in 2011.

Earlier this week, Air Berlin announced its chief executive, Hartmut Mehdorn, would resign to take over a seat on the airline's non-executive supervisory board. Mehdorn, who initiated the cost-cutting program, is to be replaced by the airline's chief strategy officer Wolfgang Prock-Schauer.

uhe/kms (dpa, dapd)

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