Air Berlin records net profit in 2012

At today's press conference on the 2012 results, Air Berlin's CEO Wolfgang Prock-Schauer, stated, "With Turbine, we are setting up Air Berlin in line with the market. We are becoming leaner, faster and are, at the same time, continuously improving our service and flight offers. In the first months of 2013, we have initiated a number of measures. It goes without saying that such programmes have a start-up phase and start-up costs. We will reach 'cruising altitude' by the end of 2014."

This two-year programme will enable Germany's second-largest airline to further expand its presence in core markets and to make structural changes aimed at making the company sustainably fit for the future.

For that purpose, Air Berlin will further promote its integrated business model through which the company caters to tourist travelers and business clients.

Up to the end of 2014, the Turbine programme includes initiatives of approximately EUR400m, so as to achieve a sustainably competitive profit situation.

Turbine programme with multiple measures started
The turnaround programme comprises in particular the areas network and fleet, sales & distribution, products and services as well as operations. The first Turbine measures have already been implemented in this year's summer flight schedule. The optimized offer strengthens Air Berlin's presence in Europe and further expands the long-haul connections to North America.

Air Berlin is carrying out the network optimization by using the principle of increasing frequencies on economically profitable routes. The target is a robust network that is less susceptible to seasonal fluctuations and provides for more productive aircraft and personnel. As a result the airline is strengthening its long-haul hubs Berlin and Dusseldorf with additional long-haul frequencies and improved flight connections.

These will increase in Berlin from ca. 7,600 to ca. 11,000, and in Dusseldorf from ca. 3,000 to ca. 4,050. At both airports, the number of weekly flight frequencies will grow by a total of 61 additional connections as compared to the previous year.

At the same time Air Berlin has reduced economically unprofitable routes, with the number of routes decreasing from 523 to 438 on an annual comparison. With the optimized flight schedule, the fleet will be reduced from 155 aircraft at the end of 2012, to 143 aircraft at the end of 2013.

Network and station optimization will result in increased crew productivity. In the future, comprehensive aircraft maintenance (Base Maintenance) will only be carried out in Munich.

In connection with the restructuring cost reductions in personnel are necessary. Between January and the end of March 2013, 180 jobs will have been eliminated.

Air Berlin is expanding its service in line with passenger requirements. From mid-year onwards, a modular catering concept will be introduced on the short and medium-haul flights. This will provide passengers with services commensurate with the duration of the flight. An example is the new Business Class seats introduced on long-haul flights.

Net profit for 2012
Air Berlin concluded the 2012 business year with a return to profitability. The operating profit before interest and taxes (EBIT) of EUR70.2m was a significant improvement over the previous year results. The company's net income of EUR6.8m marks a return to profitability and follows a loss of reported EUR271.8 (restated: -420.4m) in the 2011 business year.

In the past year, Air Berlin increased its group revenue to EUR4.31bn (2011: EUR4.23bn). While the number of passengers decreased by 5.5% to 33.3 million (previous year: 35.3 million), capacity utilisation increased by 1.6 percentage points to 79.80% (previous year: 78.21%). This was achieved by a further fleet reduction of 15 aircraft to 155 aircraft and improvements of the flight schedule. Yield (revenue per passenger) improved by 7.7% to EUR120.05 (previous year: EUR111.43).

The spin-off of the frequent-flyer programme 'topbonus', the implementation of the efficiency programme 'Shape & Size' and the increasing synergy effects resulting from the strategic partnership with Etihad Airways have contributed to the positive development of the operating result. In this context, Shape & Size has contributed EUR250m.

"The profit of the past financial year and the successful placement of the convertible bond enabled us to further stabilize the financial basis of the company. The favorable conditions, the swift placement and over-subscription of the bond demonstrate the market's confidence in our company," stated Air Berlin's Chief Financial Officer, Ulf Hüttmeyer. The goal for 2013 is a break-even at the EBIT level and therefore operational profitability.

The strategic partnership with Etihad Airways, which started at the beginning of 2012, has already shown positive effects within less than 12 months. By the end of 2012, codeshare routes enabled the two airlines to generate together a revenue increase of EUR100m. Air Berlin and Etihad Airways have already concluded almost 100 agreements with companies and sales partners and through synergies have further increased revenue and reduced operating costs.

By further expanding codeshare routes with other Etihad Airways partners, Air Berlin will be able in the future to offer more destinations and increase revenue generated by codesharing. Furthermore, the strategic partnership is increasingly reducing costs for both airlines. For example, in the areas of procurement, maintenance, training and product harmonization, the two airlines are increasingly making use of their synergy potentials and expect these to reach their full potential in the coming years.

Global network established
Wolfgang Prock-Schauer assesses the advantages of the strategic partnership with Etihad Airways, "Our cooperation with Etihad Airways exceeds all our expectations." This cooperation enabled Air Berlin to set up a global route network in the course of the past year. Within one year, Etihad Airways and Air Berlin have increased the number of codeshare routes to 90 connections and are flying to a combined 239 destinations in 77 countries. In 2012 alone, more than 320,000 passengers used the common flight network.

Air Berlin's membership in the global airline alliance, oneworld, which started in March 2012, is also positive. The number of passengers traveling on these codeshare routes increased to 310,000 passengers.

Air Berlin CEO Wolfgang Prock-Schauer, added, "Our optimized route network together with the global network of our partners will enable us to be sustainably successful in the future. For that purpose, we need a functional hub in Berlin and the new airport BER that adheres to the operating times as foreseen in the official planning."