Air Berlin PLC

EANS-News: Air Berlin PLC
airberlin announces far-reaching measures

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Financial Figures/Balance Sheet/6-month report/Q2 figures 2011

Subtitle: • Aviation tax hampers return to profitability – Hunold criticizes
distortion of competition
• Additional burden on earnings caused by the increased kerosene price and the
decline in North Africa-related business 
• "Shape & Size" program strives to make company more profitable
• 2nd quarter: Increased revenue, improved yield and capacity utilization, costs
before kerosene prices and aviation tax reduced


London/Berlin (euro adhoc) - airberlin, Germany's second-largest airline
company, has launched "Shape & Size", a comprehensive program aiming to make the
company profitable in the future. The package of measures includes, inter alia,
a capacity reduction by more than one million seats in the second half of 2011
and the ensuing reduction of the fleet by 8 aircraft, the cancellation of
unprofitable routes, flight frequency reductions, the partial withdrawal from
regional airports, and the concentration on the Berlin, Düsseldorf, Palma de
Mallorca and Vienna hubs. At the presentation of the figures for the 2nd quarter
of 2011 (Q2), Joachim Hunold, airberlin's CEO, stated in Berlin on Thursday that
an improved capacity utilization, an increase in the revenue per passenger, and
cost reductions had not sufficed to offset the higher costs resulting from the
aviation tax and the increased kerosene price, and the decline of Egypt-related
business which traditionally forms an important contribution to the airline
company's revenue, but has declined due to the unrest in Northern Africa. "In
order to become profitable, we need to make cuts in our flight routes and in our
fleet," stated Hunold. Among the unprofitable flight routes to be cancelled,
airberlin's CEO mentioned: Frankfurt - Hamburg, Frankfurt - Naples, Stuttgart -
St. Petersburg, Munich - Cairo, and Düsseldorf - Paris.

Hunold cited the regional airports as the casualties of the aviation tax. For
example, airberlin will stop operating its flight connections from
Münster/Osnabrück to London, Vienna and Sylt. The same applies to the
connections from Cologne/Bonn to various destinations in Morocco and to
Valencia. Furthermore, airberlin's direct flights from Cologne to Innsbruck,
Naples and Palermo will no longer be available during the winter months. The
Hanover - London route will be cancelled. As of November, Karlsruhe, Dresden and
Basel will no longer offer direct flight connections to Palma de Mallorca over
the winter. Flights from Paderborn to London and Manchester will be a thing of
the past. Furthermore, in numerous airports, airberlin will reduce flights to
Malaga and Alicante or - as is the case in Klagenfurt - no longer offer these
destinations, at least over the winter. In Erfurt, airberlin will give up its
presence completely.
 
As Hunold emphasized: "The aviation tax is causing a dramatic distortion of
competition. In relation to revenue, we have to pay almost four times as much as
our largest competitor." Whereas airberlin, with a revenue of EUR 1.8 billion in
the first half of 2011, had to pay approximately EUR 74.4 million (4.1 percent
of the revenue) of aviation tax, our largest competitor in Germany, with a total
revenue of EUR 14.1 billion, only had to pay EUR 162 million (1.15 percent of
the revenue). Hunold stated: "The aviation tax
together with the existing competitive pressure makes it impossible to, e.g.,
pass on the increased kerosene price to the customers in its entirety. In order
to prevent yet further damage to the already low-margin airline traffic in
Germany, the aviation tax should be abolished as quickly as possible."

"The planned measures will possibly not suffice to obtain a positive operating
result at the end of the year, since some of the savings related to the measures
will not become effective until next year," explained Hunold.

Ulf Hüttmeyer, airberlin's CFO, emphasized that the company was on the right
track towards consolidation. In the second quarter of 2011, the yield (revenue
per passenger) increased to EUR 107.68, i.e. 6.5 percent more than in the second
quarter of the previous year. At the same time, the seat load factor increased
by 3.6 percentage points, to 77.4 percent. Considerable progress was also made
with respect to cost reduction (excluding aviation tax and kerosene). In total,
this figure amounts to approximately EUR 111 million. 

"However, the demand for flights to the tourist destinations in Northern Africa,
which are of significant importance to our company, has not recovered in the
aftermath of the unrest." Hüttmeyer cited the example of Egypt, a destination to
which airberlin usually flies about 80x per week. For weeks on end, there were
no airberlin flights to Egypt at all, and only in March this year, were flights
to Egypt gradually resumed. The same was the case for Morocco and Tunisia.
Overall, in the second quarter of 2011, capacity for North Africa-bound flights
was reduced by 25 percent in comparison with the second quarter of the previous
year. Hüttmeyer calculated that the loss related to this reduction alone
amounted to EUR 20 million for the second quarter. This figure, together with
the additional cost for the increased kerosene price of at least EUR 71 million
and the aviation tax of approximately EUR 45 million, amounts to at least EUR
136 million. 

The airberlin hubs in Berlin and Düsseldorf are developing in a positive manner.
One year prior to the opening of the new Berlin airport, Berlin Brandenburg
Willy Brandt (BER), airberlin's hub is offering 9,000 flight connections per
week, more connections than ever before. In June 2011, following a continuous
period of growth, the share of transit passengers reached 17 percent. The
highest percentage recorded so far on a single day was approximately 23 percent.
airberlin's Düsseldorf hub is equally successful, and airberlin was able to
increase the passenger volume for the first six months of the year by 9 percent
over the previous year. In June, the share of transit passengers at the
Düsseldorf hub amounted to 16 percent, and the highest percentage recorded so
far on a single day was approximately 20 percent. A total of 4,400 flight
connections per week are available. The hub in Palma de Mallorca benefited from
the new hub structure established in 2010. In the summer of 2011, the number of
connections was increased by 15 percent over the summer of the previous year.
Starting from the winter flight schedule, the Vienna airport will move more into
the direction of a hub as well. In this manner, the airberlin group will offer
more transit connections and increased flight frequencies to Eastern Europe
(Belgrade, Bucharest, Sofia) and on the North-South axis (e.g. Hamburg - Sofia)
as well as improved departure times.

As Joachim Hunold, airberlin's CEO, commented: "Our hubs are already running
smoothly, and we are further expanding them. By adding just a single new flight
route, we are able to provide several new transit combinations. The hub concept
enables us to offer new destinations more rapidly, and to fly long-distance
routes in a profitable manner."

Hunold called the previously agreed codeshare agreements with airberlin's future
partners in the oneworld® airline alliance a success story. Since the beginning
of this year, airberlin had already registered about 100,000 codeshare bookings
from customers of the partner airlines. In North America alone, airberlin is
currently offering flights to 35 destinations in the United States, Canada,
Puerto Rico and the Bahamas. 

In the second quarter, Air Berlin PLC increased its revenue from EUR 877 million
(Q2 2010, including NIKI: EUR 957.9 million) to EUR 1.1 billion, i.e. an
increase of 27.3 percent over the corresponding period of the previous year.
Despite revenue being lower than planned, and the additional cost related to the
oil price, EBITDAR (Earnings before interest, taxes, depreciation, amortization
and leasing expenses) increased from EUR 124.3 million (Q2 2010, including NIKI:
EUR 129.6 million) to EUR 142.3 million; EBIT (Earnings before interest and
taxes) decreased from EUR -28.2 million (Q2 2010,
including NIKI: EUR -27.8 million) to EUR -32.2 million. Without the aviation
tax, EBIT would have amounted to EUR 12.2 million. The financial result
decreased from EUR -39.7 million (Q2 2010, including NIKI: EUR -40.5 million) to
EUR -47.3 million.

Air Berlin PLC's total equity amounts to EUR 308.3 million (2010: EUR 490.9
million), and net indebtedness amounts to EUR 616.1 million (2010: EUR 493.4
million).


Further inquiry note:
Uwe Berlinghoff
Director Corporate Communications airberlin
phone:  +49 30 3434 1500
fax:    +49 30 3434 1509
e-mail: abpresse@airberlin.com

end of announcement                               euro adhoc 
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company:     Air Berlin PLC
             The Hour House, High Street 32
             UK-WD3 1ER Rickmansworth, Herts
phone:       +49 (0)30 3434 1500
FAX:         +49 (0)30/3434-1049
mail:     abpresse@airberlin.com
WWW:      http://www.airberlin.com
sector:      Air Transport
ISIN:        GB00B128C026
indexes:     SDAX, Classic All Share, Prime All Share
stockmarkets: regulated dealing/prime standard: Frankfurt, free trade: Berlin,
             Hamburg, Stuttgart, Düsseldorf, München 
language:   English
 



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