Smaller loss a good sign for German airline

Air Berlin, the German carrier partly owned by Etihad Airways, has reported better-than-expected first-quarter figures, leading its senior management to announce that the business "is pointing in the right direction".

The airline yesterday reported an operating loss of €149.3m (Dh705.5m), against €188m for the first quarter of last year, although analysts had predicted a loss of €160m.

Revenue rose 4 per cent to €813m, while operating expenses increased only 1.5 per cent, which the airline attributes to its efficiency drive. Net loss narrowed to €102.9m from €121m, with the help of a €50m tax credit.

Air Berlin had been planning to realise €200m of savings this year, with over half of that planned for the second half. However, the airline conceded yesterday that that schedule had been derailed by delays to the opening of its future hub at the new Berlin Brandenburg Airport.

Air Berlin, which has not posted an annual operating profit since 2007, is trying to shrink its way back to profitability by cutting passenger capacity, unprofitable routes and postponing airplane orders.

It has reduced capacity by more than 1 million seats; put on hold 19 jets due for delivery this year and next year, and is closing bases in Erfurt and Dortmund, shaving a further €395m from spending.

The airline, Germany's second-largest carrier after Lufthansa, said passenger numbers fell 4.3 per cent last month. It carried 2.66 million passengers, but its load factor climbed 2 per cent to 78 per cent, as the number of seats it offered fell 6.7 per cent.

"We're starting to step up our efficiency and reap the benefit of lower costs ahead of our competition," said Hartmut Mehdorn, the chief executive of Air Berlin. "As a result, nearly all the indicators of significance for our business show it is pointing in the right direction."

Etihad, based in Abu Dhabi, owns 29 per cent of Air Berlin.

The German carrier's shares have declined 21 per cent this year, threatening to extend five straight annual declines and valuing the company at €230m.