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Airberlin’s second quarter and first half loss widens

Airberlin (airberlin.com) (Berlin) has not stemmed its losses. The airline reported a second quarter net loss of €37.5 million ($41.8 million). This represents a 2Q widened net loss from €8.6 million ($9.5 million) reported in the same period a year ago.

The company’s first half net loss was also reported as €247.6 million ($276 million), widened from the €201.2 million net loss ($224.4 million) previously reported for the same period a year ago.

The airline issued this financial report:

Revenue performance in the second quarter of 2015 was characterized by tactical capacity adjustments. At 1.07 billion euros in Q2 2015, revenue fell by 7.0 percent compared to the same period last year (Q2 2014 1.15 billion euros). Accordingly, Group revenue also declined by -2.3 percent (from 1.91 billion euros to 1.87 billion euros) in the first half of 2015. As a result of capacity consolidation, revenue decreased compared to last year, but capacity utilisation and revenue per available seat kilometre (RASK) improved.

Stefan Pichler, CEO airberlin:

“Following a good first quarter, the second quarter was a transition quarter in line with the market trend, as expected and announced. We are optimistic about the outlook for the second half of the year. I am convinced that airberlin is well positioned, thanks to the efficiency improvement measures we have introduced. The noticeable 2.1 percent load factor improvement in July to 87.3 percent shows that we’re on the right track. In the fourth quarter, we will begin the consistent transformation of our business model.”

Operating earnings (EBIT) were -15.9 million euros in Q2 2015 (Q2 2014: -6.9 million euros). This year’s shift in the Easter holidays and last year’s Lufthansa strike affected earnings performance during Q2 2015. Benefits due to the low oil prices were offset by fuel hedging and the US dollar development. Over the half-year, however, airberlin improved its operating earnings (EBIT) by 7.3 percent compared to last year (HY 2014: -189.7 million euros, HY 2015: -175.8 million euros).

Net profit in the second quarter is -37.5 million euros (Q2 2014: 8.6 million euros). In the first half-year, net profit was -247.6 million euros (HY 2014: -201.2 million euros), which was primarily due to pronounced currency effects when evaluating derivates.

Positive RASK performance thanks to efficient capacity and revenue management

In a competitive market environment, Airberlin slightly increased revenue per available seat kilometer (RASK) in the second quarter, which coincided with the system-driven realignment of its revenue management. Total revenue per available seat kilometre (RASK) was 7.20 eurocts (Q2 2014: 7.16 eurocts), which represents a 0.6 percent increase. In terms of half-year results, RASK also increased by 1.2 percent, from 6.90 eurocts to 6.99 eurocts. In terms of yield performance, the average yield fell by -1.6 percent, from 120.5 euros to 118.5 euros. Compared to the same half-year period last year, the yield improved by 0.7 percent, from 119.0 euros to 119.8 euros.

In the second quarter, Airberlin offered 15.0 billion available seat kilometers (ASK), which, in accordance with its capacity planning, represents a fall of 7.1 percent (Q2 2014: 16.0 billion). Cost per ASK (CASK) rose by 1.5 percent from 7.20 eurocts to 7.31 eurocts.

Realignment of business model

During the first phase of the realignment, the management structure and management processes of the Airberlin Group were more closely aligned to operational airline processes. In addition to the short-term capacity consolidation, the airberlin group continues to focus its efforts on the redesign of its revenue management and sales.

A fundamental review of the current network operated by Airberlin is nearing completion and is aimed at significantly improving both the starting position of the operating costs per ASK (CASK) and the revenue per available seat kilometre. Optimising internal business processes and increasing focus on core business will continue during the 2nd half of 2015.

Outlook

The second half of the current financial year will aim at implementing the optimisation measures initiated during the first half year. Considerable improvements in yield, capacity utilisation and RASK are expected.

Copyright Photo: Rolf Wallner/AirlinersGallery.com. Airberlin is phasing out its Boeing 737 fleet and is going to an all-Airbus fleet. The last 737 should be retired by the end of next year unless the carrier decides to cut additional loss-making routes. Boeing 737-86J D-ABME (msn 37766) painted in the Oneworld scheme taxies at Zurich.

Airberlin aircraft slide show:

Eurowings to add four new routes from Vienna

Eurowings (Dusseldorf) in February, through its parent (Lufthansa Group,) announced Vienna, Austria would be its first base outside of Germany:

“Following close consultation with Austrian Airlines (Vienna) and at the carrier’s own request, two Airbus A320 aircraft are being stationed at VIE initially, offering point-to-point connections on European routes. The aircraft are to fly in the colors of the new Eurowings. The aircraft will be staffed with crews from Austrian. This partnership is possible as a result of Austrian’s new collective agreement, which was entered into in December 2014 and offers additional prospects to the 900 pilots and 2,300 flight attendants.

With the new Eurowings brand, the Lufthansa Group is entering new markets in the price-sensitive leisure travel sector, thereby safeguarding its leading position in its home markets of Germany, Austria, Switzerland and Belgium. By the end of 2015, Eurowings and Germanwings along with other European airlines are to be united on a joint platform and should acquire new customers by offering low-cost short and long-haul services.”

In October, Eurowings will be taking over 55 routes from Germanwings along with the appropriate amount of aircraft and crews to fly the newly assigned routes.

Eurowings has now announced a further expansion at VIE with four additional routes starting on November 9 to Barcelona, London (Stansted), Palma de Mallorca and Rome (Fiumicino).

The new Eurowings will operate the Airbus A320s in Austria under a new Austrian AOC.

Eurowings aircraft slide show:

Air Serbia applies for codeshare service to the U.S. via partner Airberlin

Air Serbia (Belgrade) hopes to serve the United States again. Formerly as Jat Airways, the company previously flew to the USA starting in 1970 with Boeing 707s. Later McDonnell Douglas DC-10-30s were deployed on those routes starting in 1978 (below).

Above Copyright Photo: Rolf Wallner/AirlinersGallery.com. JAT-Yugoslav Airlines (later Jat Airways) McDonnell Douglas DC-10-30 YU-AMA (msn 46981) approaches Zurich.

Now as Air Serbia, the airline has filed an application with the U.S. Department of Transportation (DOT) to serve the U.S. via a codeshare agreement with partner Airberlin (Berlin) using Airbus A330s (above).

If approved, the Air Serbia code would be shown on Airberlin flights to Chicago (O’Hare), Miami and New York (JFK) via Berlin (Tegel) and Dusseldorf according to Airline Route.

Top Copyright Photo: Jay Selman/AirlinersGallery.com. Airberlin’s Airbus A330-223 D-ALPC (msn 444) approaches the runway at New York’s John F. Kennedy International Airport.

Air Serbia aircraft slide show:

Jat Airways aircraft slide show:

Airberlin aircraft slide show:

Finnair continues negotiations to sell 60% of Nordic Regional Airlines

Finnair (Helsinki) has issued this update on the on-going negotiations with Staffpoint and G.W. Sohlberg to sell a 60 percent share in its subsidiary Nordic Regional Airlines (Norra) (previously Flybe Nordic) (Helsinki). Norra operates 12 ATR 72-500s, two Embraer ERJ 170s and 12 Embraer ERJ 190s for Finnair on domestic and European routes. Here is the update:

Finnair, Staffpoint Holding Ltd (Staffpoint) and G.W. Sohlberg Ltd (GWS) have previously indicated an intention to conclude a transaction whereby 60 percent of the shares in Nordic Regional Airlines AB would be transferred to the ownership of Staffpoint and GWS.

As of March 31, 2015, Finnair has owned 100 percent of the company during an interim permission by the Finnish Competition and Consumer Authority (FCCA). Due to the negotiations being protracted and the interim permission expiring, Finnair has now filed an application with the FCCA to approve the current ownership structure.

However, negotiations on the ownership arrangements of Nordic Regional Airlines AB continue, and Finnair expects the transaction to proceed within the next few months. The delay is due to the need of the parties to assess even more thoroughly the alternative traffic models of regional flying in a constantly developing operating environment.

Nordic Regional Airlines AB owns the entire share stock in its Finnish subsidiary Nordic Regional Airlines Oy (Norra).

Norra operates a fleet of 26 ATR and Embraer planes on Finnair’s domestic and European routes. The company previously operated under the name Flybe Finland Oy.

Above Photo: Norra.

On January 7, 2015, Finnair signed a Memorandum of Understanding (MOU) with Staffpoint and GWS on a transaction whereby Staffpoint and GWS would jointly acquire from Flybe Ltd its 60 percent majority stake in Finnair’s and Flybe Ltd’s joint venture company, Nordic Regional Airlines AB.

While the negotiations continued, Finnair acquired Flybe Ltd’s stake, and Flybe Nordic was thus transferred entirely to Finnair’s ownership on March 31, 2015.

Finnair has issued stock exchange releases on the Norra transactions on November 12, 2014, January 7, 2015, January 29, 2015 and March 31, 2015.

Top Copyright Photo: Paul Bannwarth/AirlinersGallery.com. Finnair (Nordic Regional Airlines-Norra) Embraer ERJ 190-100LR OH-LKH (msn 19000086) prepares to land in Zurich.

Finnair aircraft slide show:

Finnair-Norra aircraft slide show:

Video: A typical turnaround flight in rural Finland.

Lufthansa Group improves its financial results for the first half of 2015

Lufthansa Group (Lufthansa) (Frankfurt) today issued this financial report for the first half of 2015. The group produced a profit of €954 million ($1.0 billion) for the first six months of 2015, compared to a loss of €79 million ($86.3 million) in the same period a year ago. Here is the group’s report:

The Lufthansa Group reports solid business development for the first half of 2015 and improved results in all of its operating segments. The Adjusted EBIT (Earnings Before Interest and Tax) rose by EUR 290 million year-on-year to EUR 468 million. For the six months ended June 30, sales increased by 8.5 percent to EUR 15.4 billion, with traffic revenue accounting for EUR 12.1 billion of that figure.

Yields for the Lufthansa Group’s passenger airlines rose by 2.4 percent in the first half of 2015, which was mainly exchange rate related. Had it not been for the tailwind from a weaker euro, however, yields would have been appreciably lower, in line with expectations.

In the second quarter alone, yields declined by 5.7 percent after adjusting for exchange rate effects. Although unit costs as a whole also rose mainly as a result of currency exchange rates, the EUR 309 million reduction in fuel costs coupled with improved sales and capacity utilization more than compensated for the reduction in prices. All currency effects in the first six months net to a total negative impact of EUR 158 million. The net effect is negative as Lufthansa Group has higher costs in foreign currencies, among others due to fuel spending in US Dollar, compared to the revenue side in foreign currencies.

The Group’s net result for the first six months of the year rose to EUR 954 million, compared with a net loss of EUR 79 million for the same period in the prior year. In addition to a higher operating result, this is mainly due to the increase in the financial result. More than half of the Group’s net result was attributable to an accounting effect resulting from the appreciation in equity capital of EUR 503 million following the redemption of the jetBlue convertible bond in the first quarter. In the second quarter, assessments of interest and exchange rate hedging instruments as well as fuel hedging options had a positive impact, increasing the result by a total of EUR 176 million.

Simone Menne, Chairman of the Financial and Aviation services of Deutsche Lufthansa AG said:

“Our first-half results are solid. Aside from the positive development of our business operating areas and, in particular, our passenger airlines, which gained extra momentum in the second quarter, the fall in fuel costs is largely responsible for the improvement in our results. We will, however, not be misled by that, since we assume that the price level for airline tickets will not recover. We will therefore continue to work consistently on the competitive focus of the Lufthansa Group.”

In the second quarter, the Lufthansa Group achieved an Adjusted EBIT margin of 7.6 percent. Lufthansa Passenger Airlines and, in particular, Swiss played a crucial role in this positive development. The Passenger Airline Group recorded a margin of almost 8 percent in the second quarter, with Swiss, with a margin of over 11 percent, posting an exceptionally good result – also in comparison to others in the sector.

Germanwings also remains on a successful course, and will close the current year in profit for the first time.

Simone Menne:

“Our strategic focus is right. On the one hand, our premium brands – Lufthansa and Swiss – are very successful, and at the same time Germanwings and Eurowings are also showing good business developments as secondary brands. We are focusing on the premium quality of our hub airlines and the high level of competitiveness of our secondary brands in point-to-point traffic. This approach makes us profitable and fit for the future within the airline market”.

In the first half year, Lufthansa Passenger Airlines improved its result by EUR 181 million, Swiss by EUR 90 million, based on an Adjusted EBIT of EUR 178 million.

While Austrian Airlines reported a loss of EUR 17 million in the first half-year, it managed to increase the Adjusted EBIT by a solid EUR 27m compared with the previous year.

However, in the second quarter, Lufthansa Cargo was unable to maintain its good performance of the first quarter. With the introduction of the summer timetable, Lufthansa Cargo’s competitors significantly increased their freight capacity in many markets, thereby placing prices under increasing pressure. Eventually, the logistics segment achieved an improvement of EUR 7 million in the Adjusted EBIT to EUR 50 million in the first half-year.

The other business segments also managed to improve their half-year results:

Lufthansa Technik by EUR 41 million to EUR 268 million and LSG SkyChefs by EUR 17 million to EUR 26 million.

The equity ratio rose again to 17.5 percent at the end of the second quarter due to the higher actuarial interest rate and the resultant decrease in pension provisions. The ratio was therewith higher than for the full-year 2014. Although pension liabilities declined as a result of the 2.9 percent increase in the actuarial interest rate, at EUR 6.6bn overall pension liabilities still remain at a very high level.

Simone Menne: “With regard to pension liabilities and equity, it can also be said that developments throughout the second quarter have been positive, even if they were strongly driven by external factors. The need for sustainable structures in our pension scheme and transitional pension arrangements remains unchanged, nevertheless. The ambitious investment program to which we are committed to in the coming years is part of our strategy to ensure our sustainability. In order to generate the necessary funds we need the right conditions in all the business areas and companies within the Lufthansa Group.”

In the first half, operating cash-flow rose by almost 45 percent to EUR 2.5bn. At the end of the first half-year, a free cash flow of just over EUR 1bn was reported – almost double that of the previous year. Against this background, net indebtedness decreased substantially by 31 percent compared to the full-year 2014.

As planned, capital expenditure rose year-on-year. Amongst other things, the delivery of two further Airbus A380s and four Boeing 747-8s as well as the modernization of First and Business Class on the long-haul fleet and the installation of the new Premium Economy Class were contributory factors. Gross expenditure in 2015 will total EUR 2.9 billion. For the following years, a decline in the level of investment to EUR 2.5 billion is planned.

Lufthansa confirms its outlook for the full-year 2015 with an Adjusted EBIT of more than EUR 1.5 million before strike costs.

Copyright Photo: Rolf Wallner/AirlinersGallery.com. Lufthansa is approaching the retirement of its remaining Boeing 737 fleet (Boeing 737-300s and 737-500s). The Classic 737 is likely to be retired by the end of the year depending on schedule demand although this remains fluid. Boeing 737-330 D-ABXL (msn 23531) taxies at Zurich.

Lufthansa aircraft slide show:

airBaltic to operate winter weekly flights to Salzburg, will start two new routes from Tallinn

airBaltic (Riga) will operate weekly winter seasonal Boeing 737 service from Riga to Salzburg from December 26, 2015 through March 19, 2016.

Additionally, next summer, the carrier will launch two new routes from Tallinn, Estonia. Tallinn – Amsterdam service will be launched on March 27, 2016 and Tallinn – Stockholm (Bromma) will commence on the same day per Airline Route.

Copyright Photo: Paul Bannwarth/AirlinersGallery.com. Boeing 737-36Q YL-BBJ YL-BBJ (msn 30333) approaches the runway at Zurich.

airBaltic aircraft slide show:

Austrian Airlines to begin operating the Embraer 195 in January

Austrian Airlines (Vienna) is acquiring the 17 120-seat Embraer 195s (above) from fellow Lufthansa Group operator Lufthansa CityLine (Munich). The first aircraft delivery is due next month in August. The newer E195s will gradually replace Austrian’s aging Fokker 70s and Fokker 100s (below) by 2017. Lufthansa CityLine is replacing its E195s with Bombardier CRJ900s.

Austrian will introduce the new type on January 4, 2016. According to Airline Route, the first two E195 routes will be from Vienna to both Stuttgart and Tirana followed by Thessaloniki on January 8, 2016 and Milan (Malpensa) and Warsaw on January 9, 2016.

Top Copyright Photo: Andi Hiltl/AirlinersGallery.com. Lufthansa CityLine Embraer ERJ 190-200LR (ERJ 195) D-AEME (msn 19000308) lands at Zurich.

Austrian Airlines aircraft slide show:

Lufthansa CityLine aircraft slide show:

Bottom Copyright Photo: Paul Bannwarth/AirlinersGallery.com. Fokker F.28 Mk. 0100 OE-LVO (msn 11460) approaches the runway at Zurich.

FlyEgypt arrives in Zurich

FlyEgypt (Cairo) today (July 11) start a weekly charter flight from Zurich to Marsa Alam in Eqypt. The new Egyptian airline commenced charter operations on February 12, 2015 with a charter flight from Cairo to Jeddah. The airline has recently been operating charters to Europe, especially the Italian market.

The new airline describes its activities:

FlyEgypt is the first budget airline in Egypt, with a dream of putting destinations within people’s reach at affordable fares, enabling people to discover the world. FlyEgypt will start its operations as a single class charter operator; it is an equity-funded organization, backed by some of the major shareholders of the Talaat Mostafa Group (TMG).

Egypt, the cradle of civilization, with its tourist attractions and resorts, lacked a local airline that efficiently connects passengers to their destinations. FlyEgypt addresses this deficiency; it operates from and to under-served beautiful tourist attractions and resorts in Egypt. FlyEgypt is committed to offer safe, secure, viable and efficient air transport services.

FlyEgypt has employed the best available calibers in the industry through a very sophisticated hiring process. Our team is our major asset, with a deep commitment to deliver what we promise, with an intense focus on safety, efficiency and cost optimization.

Safety is our passion and core value, we work so all air passengers arrive safely at their destinations. We ensure this through proper training, work practices, risk management and adherence to safety regulations at all times.

Photo Above: FlyEgypt.

Copyright Photo: Andi Hiltl/AirlinersGallery.com. Formerly operated by Airberlin as D-ABBG, Boeing 737-86J SU-TMG (msn 32918) was handed over to the new airline on December 23, 2014.

B&H Airlines to be liquidated

B&H Airlines (Sarajevo) will be liquidated. The flag carrier of Bosnia and Herzegovina suspended schedule passenger operations on June 11. The federal government has decided to liquidate the carrier according to Balkans.com.

The airline was originally founded in 1994 as Air Bosna and became the current B&H Airlines in June 2005.

Read the full report: CLICK HERE

Photo Above: B&H Airlines. The personnel of the airline will lose their jobs.

Top Copyright Photo: Keith Burton/AirlinersGallery.com. ATR 72-212 T9-AAD (msn 464) approaches the runway at Zurich.

B&H Airlines aircraft slide show:

Video:

B&H Airlines aircraft slide show:

Lufthansa reaches the 100th Airbus A320 Family aircraft milestone with its voluntary sound-reducing vortex generators

Lufthansa (Frankfurt) has issued this statement about reaching the 100th aircraft in its noise reduction program:

Experts from Lufthansa Technik will be equipping the 100th aircraft of the Lufthansa A320 fleet with sound-reducing vortex generators (below) in the next few weeks. The Lufthansa Group and German Aerospace Center (Deutsches Zentrum für Luft- und Raumfahrt, DLR) project is part of the research group “Quieter Transport” (“Leiser Verkehr”), has thus reached an important milestone. Since November 2014, Lufthansa has equipped its short and medium-haul aircraft of the types Airbus A319, A320 und A321 with the noise-reducing components on the underside of the wings.

Photo Above: Lufthansa. The vortex generators being installed on the LH Airbus A320 Family fleet.

It is the first airline in the world to do so.

In total, 157 aircraft in the short and medium-haul fleet are being equipped with a vortex generator. Newly built Airbus aircraft have already been delivered to Lufthansa with the sound-reducing technology since the beginning of 2014. More than 200 Lufthansa jets will fly much more quietly in future.

Flyover measurements taken by Lufthansa in cooperation with the DLR show vortex generators remove annoying tones and significantly reduce the overall noise level of the aircraft when landing – by up to four decibels at distances of between ten and 17 kilometers away from the airport.

According to information from the manufacturer, this effect is even greater further away from the airport. These tones were previously created by airflows over circular pressure equalisation vents for the fuel tanks on the underside of the wings during flight. The new components generate an air vortex over the pressure equalisation vents for the fuel tanks that effectively prevent these tones from being created.
This measure is part of the Hessian “Noise Protection Alliance“, which was agreed by the state government of Hesse and the airline industry.

MD-11 measurement flights made by Lufthansa Cargo in Magdeburg-Cochstedt

Equipping or converting the A320 fleet is one of the most extensive voluntary measures for active sound reduction undertaken by Lufthansa to date.

A further possibility to significantly reduce aircraft noise will be intensively tested in the next few weeks in flyover measurements over several days at Magdeburg-Cochstedt airport with two MD-11 freight aircraft from Lufthansa Cargo. Modified sound suppression has been installed on the engine intakes of the General Electric CF6-80C2 engines. In the MODAL project, sponsored by the German Federal Ministry for Economic Affairs, Lufthansa has already carried out investigations on a Lufthansa Technik engine test bench in Hamburg together with the DLR. This first step produced the main evidence that the so-called Hardwall Acoustic Panels in the engine intake have a noise-reducing effect. Now, in the second step, the effectiveness of the panels under real conditions is being investigated. In addition, Lufthansa expects findings to be made about reductions in landing gear noise achieved by covering the cavities in the aircraft landing gear.

During the flyover measurements at Magdeburg-Cochstedt, the aircraft approaches the airport several times, as if it were landing, and then overflies the airport several times in a certain configuration. Other constituents of the measurements programme are take-off flights with ground measurements at various engine revolution levels. Numerous microphones on the ground record the sound of the aircraft flying at different heights during every flyover. The measurement data will form the basis for possible approval of the modification for the existing Lufthansa Cargo MD-11 fleet.

The most important measure for reducing flight noise is continual investment in new aircraft. The Lufthansa Group will receive a total of 259 aircraft of the latest generation by 2025. Thus in future, 59 state-of-the-art aircraft – 34 Boeing 777-9Xs and 25 Airbus A350-900s – will supplement the long-haul fleet of the Lufthansa Group. The A350-900 will already be delivered from 2016. The noise emissions of the new models are considerably lower than those of today’s aircraft.

Lufthansa aircraft slide show: