Air Berlin prepares for future headwinds

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Air Berlin, Germany's number two airline, warned of tough times ahead for the industry on Wednesday, necessitating a sharp reduction in its aircraft fleet.

Air Berlin said in a statement it would cut its fleet from 170 aircraft to 152, a reduction of 10 percent, by next summer in a bid to cut costs by around 200 million euros ($273 million).

"We are currently operating in a turbulent environment, both in terms of competition and economic conditions," chief executive Hartmut Mehdorn said in a statement.

"In order to secure the company's future for the long term and to restore our former strength, every single company division will be scrutinized over the coming months."

Just a day earlier, Air Berlin's main rival, the much-bigger Lufthansa group, said it no longer expected to achieve its profit targets for this year following weaker-than-expected results in August and in view of ongoing economic uncertainty.

While Lufthansa was still expecting operating profit to reach the high hundreds of millions of euros (dollars), "as viewed currently, the target of a further increase on the previous year's figure of 876 million euros ($1.2 billion) no longer appears to be achievable," the airline said.

The adjustment "reflects a weaker-than-expected monthly result" in its passenger business in August.

In addition, "further booking trend expectations were also adjusted... in view of ongoing economic uncertainties."

At a special investors' day in Zurich on Wednesday, Lufthansa further downgraded its planned expansion of capacity for the coming winter season.

Originally, the airline had expected to boost capacity by 12 percent in the winter months.

But it already downscaled the projected expansion to 6.0 percent in July and has now adjusted it a second time to anticipated growth of just 4.0 percent, said board member Kay Kratky.

© 2011 AFP

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