Air Berlin earnings ′bottomed-out′ in 2011 | Business| Economy and finance news from a German perspective | DW | 16.03.2012
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Business

Air Berlin earnings 'bottomed-out' in 2011

Losses at Germany's second biggest airline grew substantially in 2011 - it is struggling under a mountain of debt and has been hit by rising fuel costs. But Air Berlin hopes to improve its fortunes with new alliances.

Air Berlin has reported losses of 266 million euros ($347 million) in 2011, almost tripling its debt of 97 million euros from the year before, the airline said in a statement on Friday.

The dive in earnings was blamed on a "rise in fuel costs by 229.2 million euros," as well as a German air traffic tax, which weighed "heavily" on earnings, incurring additional costs of 165.5 million euros.

"In spite of rising revenues and higher passenger numbers, we cannot be satisfied with the 2011 result," said chief executive Hartmut Mehrdorn.

Air Berlin's 2011 earnings slump is worse than industry analysts had expected. They had predicted losses of 185 million.

Overall, the airline is servicing a debt of more than 800 million euros, accumulated primarily during a period of strong expansion over the past decade.

CEO Mehdorn refused to present his outlook for 2012, but said the airline's losses had "bottomed-out” in 2011.

Restructuring effort

Air Berlin says it will make better progress in 2012 with the next stage of a cost-cutting and restructuring program, which it calls Shape & Size. This includes postponing orders for new aircraft, and the cancellation of a number of unprofitable routes.

"We expect the program to unfold its full impact in the second half of the year, resulting in increased earnings of more than 200 million euros," said the airline's chief financial officer, Ulf Hüttmeyer.

In addition, Air Berlin expects a strategic partnership with United Arab Emirates-based Etihad Airways – struck in December 2011 – to help with coordinated flight routes and a joint frequent travelers' program.

Air Berlin says it will also join the oneworld global airlines' alliance, which includes, among others, AmericanAirlines, Cathay Pacific, British Airways and Qantas. The move is intended to boost the Air Berlin's destinations to 800 in 150 countries.

uhe/za (dpa, Reuters)