Air Berlin Plc (AB1), Europe’s third- biggest discount carrier, said losses widened last year as tax and fuel expenses crimped margins and political unrest in North Africa led to a decline in the number of tourist flights.
The Berlin-based airline had a net loss of 271.8 million euros ($348 million), versus 97.2 million euros a year earlier, it said today in a statement. The average loss estimated by analysts surveyed by Bloomberg News was 169 million euros.
Air Berlin, almost 30 percent owned by Etihad Airways after a deal in December, paid 229.2 million euros more for fuel, and a German airport tax introduced at the start of 2011 cost it 165.6 million euros. Targeted savings of 200 million euros will all be implemented this year, while first-quarter results should improve after occupancy approached 75 percent in January for the first time since the company began monthly records, it said.
“The numbers are very bad, worse than expected, but the planned savings for 2012 are very ambitious,” said Juergen Pieper, an analyst at Bankhaus Metzler in Frankfurt who recommends selling Air Berlin shares. “Those savings and the better first quarter look to be relatively good news.”
Shares Drop
Air Berlin, which revealed that it’s in code-share talks with Air France less than a week before it’s due to join the British Airways-led Oneworld alliance, fell as much as 3.5 percent. The stock was trading 0.5 percent lower at 2.29 euros as of 2:14 p.m. in Frankfurt, taking the decline this year to 8.3 percent and valuing the company at 267 million euros.
While sales rose 14 percent to 4.23 billion euros, spurred by the acquisition of remaining shares of Vienna-based carrier Niki Luftfahrt GmbH and single-seat ticket bookings favored by business travelers, the operating loss widened to 247 million euros from 9.3 million euros, and Chief Executive Officer Hartmut Mehdorn declined to provide estimates for 2012.
“The slump in tourism resulting from the political unrest in Egypt and Tunisia hit us particularly hard,” said the CEO, who assumed the role on an interim basis in September and said today he has been asked to stay until the end of 2013. “The same applies to the introduction of the aviation tax in Germany.”
About 65 percent of savings sought in 2012 will come in the second half, boosting profitability for the 12 months, though figures this quarter should exceed targets, Air Berlin said. Revenue will also gain this year and the carrier is seeking a 5 percent gain in the per-passenger yield, a measure of fares.
Etihad Holding
Air Berlin (AB1) has cut routes and flights as slowing economies hurt demand, reducing capacity by more than 1 million seats to save 250 million euros and pare debt by 50 million euros. It’s postponing receipt 19 jets in 2012 and 2013 and closing bases in Erfurt and Dortmund, shaving $508 million from spending.
Mehdorn said at an earnings briefing that Air Berlin is in talks with the French unit of Air France-KLM (AF) Group, Europe’s biggest airline, about an agreement that would allow the two carriers to place their codes on each other’s flights.
A deal might be reached in time for the winter timetable, he said. The plan is being coordinated alongside Abu Dhabi-based Etihad, with which Air Berlin has also agreed to codeshare.
Etihad agreed a $350 million package of financing and funds for planes with Air Berlin in December. The Gulf carrier reckons a 105 million-euro equity investment will be recouped in extra revenue in two years, making it a better bet for cracking the tightly regulated German market than adding new airliners.
Etihad, the third-biggest Middle Eastern carrier, doesn’t plan to increase its stake further, Mehdorn said.
Deutsche Lufthansa AG (LHA), Germany’s biggest airline, reported a full-year net loss of 13 million euros on Feb. 7 as high fuel costs and the unprofitable U.K.-based BMI unit that it’s in the process of selling weighed on profits.
To contact the reporter on this story: Alex Webb in Frankfurt at awebb25@bloomberg.net
To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net
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