Air Berlin deepens losses in second quarter of 2016

Germany-based airberlin has reported an €89.1 million ($99 million) net loss for the 2016 second quarter, widened from a €37.5 million loss in 2Q 2015. For the first half, the carrier reported a €271.5 million loss, deepened from a 1H loss of €247.6 million year-over-year (YOY).

Airberlin CEO Stefan Pichler said that while airberlin delivered on its goal to improve its cost structure, the 2016 2Q was more challenging than expected on volumes and yield. “The demand, especially on flights to holiday destinations, suffered from terrorist attacks in Europe and had a major and negative impact on airberlin’s financial performance,” he said.

With up to one-third of the carrier’s revenue generated by leisure travel, the airline was hit particularly hard by the volatile political situation in traditional holiday destinations of Turkey, Greece and North Africa.

Second-quarter revenue decreased to €970.6 million, down 9.4% YOY. Total sales declined 8.4% to €1.71 billion in the 1H.

“Although capacity was shifted to other Mediterranean destinations—such as Palma de Mallorca and the Canary Islands—overcapacity in the Spanish market resulted in depressed fares compared to the previous year,” Pichler said.

Second-quarter traffic decreased 4.1% YOY to 11.69 billion RPKs on a 3.7% YOY capacity decline to 14.32 billion ASKs, producing a load factor of 81.6%, down 0.4 point from 2Q in 2015. Total costs for the quarter were €1.04 billion, down 6.9% YOY; yield declined in the 2Q 6.4% to 7.33 euro cents YOY.

“On the positive side, unit costs decreased by 3.3% in the second quarter of 2016, compared to the second quarter of 2015,” Pichler said. Ongoing pressure caused by the highly volatile and weak market environment will impact also 3Q. Moreover, it remains uncertain how global instability will affect general consumer behavior. 

“We are in the midst of a restructuring process … airberlin will continue to build a strong network carrier with two hubs in Berlin and Dusseldorf, enhancing its long-haul flying to the US, and focusing its customer proposition to suit the needs of the high-yield passenger segment,” Pichler said. However, Pichler remained confident that Germany’s second biggest airline will navigate through the challenging market conditions.

On Aug. 3, airberlin said it will increase flights to the US up to 50% by summer 2017, from 55 to 78 weekly nonstop flights from Berlin and Dusseldorf compared to this summer. It will receive three additional Airbus A330-200s to operate the extended flight program.

On Aug 8, airberlin and its Austria-based subsidiary FlyNiki announced both carriers will introduce business class on German domestic and European flights this year.

ATWOnline