Airberlin (airberlin.com) (Berlin) reported a net profit of €8.6 million ($11.4 million) for the second quarter, reversing a net loss of €38 million ($50.4 million) for the same quarter a year ago.
The company issued this full report:
In a difficult market environment, Airberlin achieved a slightly improved operating result (EBIT) in the second quarter of the year with turnover up by 2,9% to 1,146.4 million euros. Compared to the same quarter of the previous year, Airberlin was able to improve EBIT (Earnings before Interest and Tax) to -6.9 million euros from -8.1 million euros in the previous year. Taking into account other operating income of 4.8 million euros (previous year 39.2 million euros) the annual comparison on operating level shows an improvement of more than 35 million euros. Net profit was with 8.6 million euros, an increase of 46.6 million euros on the previous year (-38.0 million euros).
In particular, Airberlin was able to increase the yield by 3.0% to 120.52 euros (previous year 116.97 euros). Offering increased by 2.9% flights and 3.5% available seat kilometers (ASK). In line with market conditions, load factor was with 82.4%, 1.3% percentage points below that of the same quarter the previous year. However, higher yield revenue per available seat kilometer (RASK) was nearly stable with 7.16 cents (previous year 7.20 cents).
The cost reduction initiatives launched under Turbine last year are on track and are also showing effects in the second quarter. Year on year, airberlin managed to lower the costs per available seat kilometre excluding fuel (CASK) by 2.8% to 5.50 cents (previous year 5.66 cents). Including fuel, CASK fell by 3.7% to 7.24 cents (previous year 7.51 cents). The cost reduction was achieved despite a rise of 8.3% in expenditure for aviation tax, as well as an increase in personnel cost of 13.9% driven by wage increases and one-off costs.
A high level of liquidity
Following a successful recapitalization program, Airberlin has liquid assets in the amount of 600 million euros cash on hand and nearly 300 million undrawn cash facilities available. Compared to year-end 2013, available cash increased by 378 million euros. Following the injection of the subordinated perpetual convertible bonds equity, increased by nearly 130 million euros compared to the end of the first quarter 2014 and stood at -270 million euros at the end of the second quarter. As a reporting date under IFRS, the equity capital has no effect on the financial operation of the company.
Airberlin’s partnerships with Etihad Airways and its network partners and oneworld® have developed very well in the second quarter. The number of passengers on the shared route network with Etihad Airways continued to grow at 7% in the first half year, with approximately 270,000 guests in absolute numbers. Additional routes from Stuttgart, Berlin and Vienna will contribute to future growth. Also the number of passengers on codeshares within the oneworld alliance rose by 7% in the first half year.
First elements of restructuring program announced
When presenting the results for Q2 2014, Airberlin’s CEO Wolfgang Prock-Schauer said: “We were able to improve the net result and our operating result is looking better than it did a year ago, but this is not sufficient. We are determined to restructure Airberlin to ensure the airline moves back to a sustainable profitability within three years. Over the last few months we have been intensively working on the restructuring program. After diligently weighing and validating all of our options in the past months, we decided that airberlin will continue to serve the three core segments, namely Europe, touristic and long haul. We substantially change the way we do business and the way we serve our market. We are able to share some first elements today.”
First elements of the program include:
Airberlin will focus on the largest travel markets in the DACH region (Germany, Austria, Switzerland) as well as Palma de Mallorca and connect these high volume routes with high frequencies in point-to-point traffic. The new network design will lead to a more stable operation throughout the year, reducing the effects of traditional high seasonality. The more focussed network design could equate to a capacity reduction in the region of 10% and will lead to a significantly more efficient operation.
Closer cooperation: closer cooperation with Etihad Airways and its network partners: Airberlin and Etihad Airways are in a process of exploiting synergy potentials in all areas in a win-win-situation for both airlines and other network partners. As a next important step Airberlin is in a process of putting together a framework for a close bilateral cooperation with Alitalia, subject to regulatory approvals.
Narrow body fleet harmonization: In order to achieve a more efficient operation airberlin will strive for narrow body jet fleet harmonization in its entire network.
Streamlining operating platforms: Airberlin is in a process of streamlining and restructuring the operational platforms it uses (AOCs). In line with network adjustments, it intends to reduce its fleet by approximately 10 aircraft. Combined with the new network approach this will enable us to eliminate underperforming elements of our business.
Close down of crew stations: Airberlin has decided and agreed after negotiations to close down five of its smaller crew bases, which will result in higher efficiency and productivity of crew resources. This measure affects the work location of pilots. This does not mean that these airports are not served by Airberlin anymore.
Enhanced commercial capabilities: Airberlin will drive commercial effectiveness with state-of-the-art commercial capabilities by optimizing our overall market approach. This includes a dedicated distribution approach in the segments we serve including our tour operator business.
Copyright Photo: Bjoern Schmitt/AirlinersGallery.com. Airberlin and the official marketing organization for the United States of America, Brand USA, are strengthening their collaboration and jointly unveiled this Airbus A320-214 registered as D-ABNB (man 5246) with this special USA livery at Dusseldorf Airport.
For Airberlin, the USA is a strategically important core market. Airberlin flies nonstop from Germany to five destinations in the USA and this summer has also increased the frequency of five different routes. There is now a daily flight from Berlin (Tegel) to Chicago (O’Hare) and the connection between the German capital and New York (JFK) has been topped up by three flights to make ten weekly connections. From Dusseldorf, Airberlin also offers ten flights a week to the Big Apple, as it did last summer. This summer there are also flights four times a week from Berlin and daily from Dusseldorf to Miami, as well as several times a week from the North Rhine Westphalian capital to Fort Myers and Los Angeles. Recently there were celebrations to mark 20 years of the connection (previously by LTU) between Dusseldorf and Fort Myers: Airberlin is the only airline to serve this destination nonstop from Europe. There are feeder flights to Berlin and Dusseldorf from numerous German and European cities. In the USA, Airberlin also offers its flight guests around 60 additional destinations through the codeshare agreement with oneworld® partner American Airlines.