Air Berlin to cut 900 jobs
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In german:Air Berlin streicht 900 Stellen - SPIEGEL ONLINE
Air Berlin to Cut 10% of Workforce - WSJ.com
Tragic.
Air Berlin to Cut 10% of Workforce - WSJ.com
FRANKFURT—Air Berlin AB1.XE +1.71% PLC said Tuesday it would shed about 10% of its 9,300-strong workforce to help save €400 million ($535.3 million) by the end of next year as Germany's second-biggest airline struggles to make good on its investment in the competitive long-haul market amid high fuel prices and a sluggish German economy.
The airline, partly owned by Etihad Airlines of Abu Dhabi, said it would reduce its fleet to 142 aircraft from 158 as of the end of September as it focuses on more profitable routes.
Air Berlin, which appointed a new chief executive last week, will likely cease operations at six to seven smaller locations to stem losses estimated at about a million euros a day, according to a person familiar with the restructuring talks between management and labor unions.
The news follows a change in command at Air Berlin whose troubles coincide with a major revamp of the domestic operations of Deutsche Lufthansa, LHA.XE -2.29% Air Berlin's main German rival which is also Europe's largest carrier by passenger numbers. Wolfgang Prock-Schauer, Air Berlin's chief strategist, took over as CEO last week.
Air Berlin hasn't turned a profit since 2007. The previous year, it had agreed to buy German charter carrier LTU and British Airways' IAG.MC -2.53% German unit DBA, two smaller airlines with which it hoped to gain routes and less price-sensitive business travelers partly by expanding to long-haul destinations.
"It's high time that Air Berlin chooses routes based on profitability rather than the preferences of its [former] CEO [Achim Hunold]," said Heinrich Grossbongardt, managing director of aviation consultancy ExpAirtise in Hamburg. "A new chief with proven experience in the sector and experience with difficult situations is definitely the right thing," Mr. Grossbongardt said. Mr. Hunold ran Air Berlin between 2006 and 2011 when he was replaced by Hartmut Mehdorn.
Tobias Sittig, an analyst at MainFirst Bank, said the new restructuring plan at Air Berlin is "the most consistent so far."
"Air Berlin never had a proper business model or suitable fleet to begin with. It then bought and failed to integrate DBA properly which added complexity. However, real trouble surfaced on the back of its acquisition of LTU, adding more complexity," Mr. Sittig said.
Part of Air Berlin's problems are beyond its control, given Germany's slowing economy and extended delays of the opening of Berlin's new airport. The new hub won't open until 2014, leaving carriers like Air Berlin dependent on Berlin's smaller, congested airports, Tegel and Schonefeld.
Latest official economic data show Germany's gross domestic product shrank 0.5% in the fourth quarter last year.
As part of the turnaround program, dubbed "Turbine," Air Berlin said it would focus on its more profitable routes, including core markets of Germany, Switzerland and Austria, and even increasing flights to Mallorca, a destination popular with German tourists. It will also expand long-haul service from Berlin and Düsseldorf, it said.
The airline, partly owned by Etihad Airlines of Abu Dhabi, said it would reduce its fleet to 142 aircraft from 158 as of the end of September as it focuses on more profitable routes.
Air Berlin, which appointed a new chief executive last week, will likely cease operations at six to seven smaller locations to stem losses estimated at about a million euros a day, according to a person familiar with the restructuring talks between management and labor unions.
The news follows a change in command at Air Berlin whose troubles coincide with a major revamp of the domestic operations of Deutsche Lufthansa, LHA.XE -2.29% Air Berlin's main German rival which is also Europe's largest carrier by passenger numbers. Wolfgang Prock-Schauer, Air Berlin's chief strategist, took over as CEO last week.
Air Berlin hasn't turned a profit since 2007. The previous year, it had agreed to buy German charter carrier LTU and British Airways' IAG.MC -2.53% German unit DBA, two smaller airlines with which it hoped to gain routes and less price-sensitive business travelers partly by expanding to long-haul destinations.
"It's high time that Air Berlin chooses routes based on profitability rather than the preferences of its [former] CEO [Achim Hunold]," said Heinrich Grossbongardt, managing director of aviation consultancy ExpAirtise in Hamburg. "A new chief with proven experience in the sector and experience with difficult situations is definitely the right thing," Mr. Grossbongardt said. Mr. Hunold ran Air Berlin between 2006 and 2011 when he was replaced by Hartmut Mehdorn.
Tobias Sittig, an analyst at MainFirst Bank, said the new restructuring plan at Air Berlin is "the most consistent so far."
"Air Berlin never had a proper business model or suitable fleet to begin with. It then bought and failed to integrate DBA properly which added complexity. However, real trouble surfaced on the back of its acquisition of LTU, adding more complexity," Mr. Sittig said.
Part of Air Berlin's problems are beyond its control, given Germany's slowing economy and extended delays of the opening of Berlin's new airport. The new hub won't open until 2014, leaving carriers like Air Berlin dependent on Berlin's smaller, congested airports, Tegel and Schonefeld.
Latest official economic data show Germany's gross domestic product shrank 0.5% in the fourth quarter last year.
As part of the turnaround program, dubbed "Turbine," Air Berlin said it would focus on its more profitable routes, including core markets of Germany, Switzerland and Austria, and even increasing flights to Mallorca, a destination popular with German tourists. It will also expand long-haul service from Berlin and Düsseldorf, it said.
Last edited by 737Jock; 15th Jan 2013 at 15:38.
Situation
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The cut price brand GW that's killing it?
The recieved wisdom is AB has been going down the tubes for a while.
They've been energetically code sharing with BA (in profit but losing money on that lamer Iberia) & S7 (in profit), (eg) so you get the nonsense where BA land you at DME, while AB wants to land you at VKO.
Is this really "one world"?
It's difficult to alter the perception it's just another uncompetitive lo-cost airline out of its depth, with the other big LH shipper GW, fighting RA & EJ head on in an aggressive German market that's sinking under falling GDP and increasing taxes.
What you will get is more bankrupcies, more shake-outs, mergers & illegal subsidies. (look at the train wrecks of AF, SAS and EA!)
Lufthansa Annual Report 2011 - Germanwings
Lufthansa expands Germanwings to counter no-frills rivals | Reuters
LH reply by eliminating business class and getting a 20% lower pilot costing on GW.
Which until recently was still losing 1m euro a week(!)
Not sure the unions are going to accept this long term, but the service quality is there, and that matters a lot nowadays.
More job losses at AB?
Looking in the crystal ball YEP 100% certain.
The recieved wisdom is AB has been going down the tubes for a while.
They've been energetically code sharing with BA (in profit but losing money on that lamer Iberia) & S7 (in profit), (eg) so you get the nonsense where BA land you at DME, while AB wants to land you at VKO.
Is this really "one world"?
It's difficult to alter the perception it's just another uncompetitive lo-cost airline out of its depth, with the other big LH shipper GW, fighting RA & EJ head on in an aggressive German market that's sinking under falling GDP and increasing taxes.
What you will get is more bankrupcies, more shake-outs, mergers & illegal subsidies. (look at the train wrecks of AF, SAS and EA!)
Lufthansa Annual Report 2011 - Germanwings
Lufthansa expands Germanwings to counter no-frills rivals | Reuters
LH reply by eliminating business class and getting a 20% lower pilot costing on GW.
Which until recently was still losing 1m euro a week(!)
Not sure the unions are going to accept this long term, but the service quality is there, and that matters a lot nowadays.
More job losses at AB?
Looking in the crystal ball YEP 100% certain.
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15 Years later
Better late then never.... LH expands GW to counteract No-frills rivals.
15 years ago LH was selling "B"´s from the failed Modiluft joint venture to RYR. Thoughts where who want´s to fly that cheap ?
Falling solid and real employment within the Country forces the distinguished Customer to re-think his travel needs. Not too many First-Class of Business Class Travelers are willing to pay for nothing more then a seat and a snack. Coach is enough for up to two hours range.
Downside: Some early responses are not that good, if I buy LH I want to fly LH and not GW. Drives some customers in the corner of the competetor.
I am sure in FRA are some educated people who will ignore that fact and theire findings in the research is diffrent: People will pay alot and get less as long as the name LH-Group is painted on the body. Time will tell. Business is too fragile.
In many Companies you can see a trend these days: Some carreer eager pimps want the fast track up and implement changes that are not allways for the best of the Company. After the error surfaces the "guilty" Guy cannot be held responsible anymore as he followed the call of his carreer and left the organisation for some greener pastures. His pockets get filled and his carreer another boost. Who cares about yesterday?
15 years ago LH was selling "B"´s from the failed Modiluft joint venture to RYR. Thoughts where who want´s to fly that cheap ?
Falling solid and real employment within the Country forces the distinguished Customer to re-think his travel needs. Not too many First-Class of Business Class Travelers are willing to pay for nothing more then a seat and a snack. Coach is enough for up to two hours range.
Downside: Some early responses are not that good, if I buy LH I want to fly LH and not GW. Drives some customers in the corner of the competetor.
I am sure in FRA are some educated people who will ignore that fact and theire findings in the research is diffrent: People will pay alot and get less as long as the name LH-Group is painted on the body. Time will tell. Business is too fragile.
In many Companies you can see a trend these days: Some carreer eager pimps want the fast track up and implement changes that are not allways for the best of the Company. After the error surfaces the "guilty" Guy cannot be held responsible anymore as he followed the call of his carreer and left the organisation for some greener pastures. His pockets get filled and his carreer another boost. Who cares about yesterday?
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In many Companies you can see a trend these days: Some carreer eager pimps want the fast track up and implement changes that are not allways for the best of the Company. After the error surfaces the "guilty" Guy cannot be held responsible anymore as he followed the call of his carreer and left the organisation for some greener pastures. His pockets get filled and his carreer another boost. Who cares about yesterday?
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