Air Berlin unveils restructuring plans

Air Berlin has unveiled a far-reaching restructuring of its business to deliver long-term growth.

The restructuring plan has three main focus areas:

•    Air Berlin will concentrate its core operations as a dedicated, focused network carrier serving higher-yielding markets from its two key hubs in Berlin and Dusseldorf, with a core fleet of 75 aircraft.

•    The leisure flying business will be separated into an independently operating  business unit.

•    Air Berlin intends to provide up to 40 Airbus A320 aircraft to the Lufthansa Group*, with up to 38 aircraft to be wet-leased under a six year wet-lease agreement*, reducing excess capacity while protecting employment and minimising restructuring costs.

The restructuring follows a comprehensive, bottom-up review of all operations, seeking to improve efficiency, limit seasonality and re-establish a clear market proposition for the airline.

Air Berlin’s core operations will be served by a fleet of 75 aircraft from summer 2017, consisting of 17 A330 wide body aircraft for long-haul flights, 40 A320 family aircraft and 18 Q400 aircraft for short-/medium-haul flights including to major business centres throughout Europe.

Fewer staff will be required, with up to 1,200 positions becoming redundant. The company will enter discussions with works councils’ representatives with an aim to confirm voluntary and compulsory redundancies by February 2017.

Stefan Pichler, airberlin’s Chief Executive Officer, said: “This far-reaching restructuring of our operations is about a new focus, giving us a new future.  

“Now more than ever, we are faced with significant external market pressures which dictate a change to our current complicated business model.  airberlin has sought to serve all market segments with one operating platform, covering both business and leisure travellers. 

“The core airberlin proposition in future is now clear:  a dedicated focused network carrier serving higher-yielding markets from two hubs in Dusseldorf and Berlin. A leaner, fitter, stronger airberlin has a bright future.”

Air Berlin’s touristic flying operations will be operated in a separate touristic-focused  business unit, as strategic options are evaluated.

Mr Pichler added: “Our leisure business has great underlying value which will be stronger in a separate touristic-focused business unit.

“In turn, this allows Air Berlin to focus on its core operation as a network scheduled airline.”  

With the announcement of the new strategy, Air Berlin also announced that it intends to provide up to 40 A320 aircraft to the Deutsche Lufthansa Group, with up to 38 aircraft to be operated under a six year wet lease agreement or ACMIO arrangement, which includes aircraft, crew, maintenance, insurance and overhead services. This arrangement allows airberlin to reduce excess capacity while reducing restructuring costs. The wet lease is to be fully operational by the 2017 summer season.

Going forward, Air Berlin’s profitable long-haul programme will be expanded with new routes and additional frequencies, particularly to the United States.

The airline’s short- and medium-haul programme will concentrate on year-round business markets with a strong focus on Italy, Scandinavia and Eastern Europe. It will also aim to build a higher share of domestic business travel.

Air Berlin will collaborate closely with the works councils and trade unions which will be involved throughout the process of change.

Air Berlin intends, subject to all required co-determination rights of the employee representatives, to offer voluntary redundancies where possible. Redeployment opportunities within the Etihad Airways Partners group of airlines, which include Jet Airways, Air Serbia, Etihad Regional, Alitalia, Air Seychelles and Etihad Airways, will endeavour to be offered to airberlin employees.

Mr Pichler said: “Of course, we understand that redundancies are unwelcome, even in a dynamic market such as Germany.  We have to make reductions but we will aim to do so in a supportive manner, offering new opportunities to employees where possible.

“Air Berlin will be a lean business focused on long-haul and higher-yield routes from Dusseldorf and Berlin, which are our two strong catchment areas. We are implementing a size and structure for the business that is fit for purpose.  We will see revenues grow and costs contained as a result of this restructuring of our business.”

* Subject to regulatory clearance

28 September 2016