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Restructuring costs drive Air Berlin to record loss
April 28, 2017 / 1:02 PM / 3 months ago

Restructuring costs drive Air Berlin to record loss

3 Min Read

BERLIN (Reuters) - Air Berlin (AB1.DE) reported a record net loss of 782 million euros (654.10 million pounds) in 2016 as well as a widening loss in the first quarter of 2017, and said it was seeking new partners as it battles to revive its fortunes.

Air Berlin, 29 percent owned by Abu Dhabi-based Etihad, is already undergoing a restructuring that will see its fleet halve to about 75 aircraft and a focus on network flights rather than the tourist flights to Spain for which it became famous.

But new CEO Thomas Winkelmann, who took over three months ago, said on Friday more needed to be done in light of results he described as "highly unsatisfactory."

Air Berlin, which has made a net loss in almost every year since 2008, will look for new partnerships and cooperation opportunities, Winkelmann said, adding that could include a new investor and nothing was ruled out.

Speculation has swirled the airline could be taken over by larger German rival Lufthansa (LHAG.DE), which is already leasing 38 planes and crew from Air Berlin to expand its budget Eurowings arm. Winkelmann was previously a Lufthansa manager.

Management at Germany's largest carrier has not explicitly ruled out a takeover, but says there are three obstacles to a potential deal - anti-trust concerns, Air Berlin's debt and its cost levels.

Lufthansa CEO Carsten Spohr is due to travel with German chancellor Angela Merkel to Abu Dhabi on Monday. "Of course, the future of Air Berlin will be discussed," a person familiar with the matter said.

Air Berlin's 2016 loss - equivalent to a loss of more than 2 million euros a day for a company with a market capitalisation of just 61 million euros - adds to pressure on Etihad in Europe.

The Gulf carrier bought equity stakes in airlines to expand its network, but its other high profile investment in Europe, Alitalia, is preparing special administration proceedings after workers rejected its latest rescue plan.

Still, Etihad said on Friday it would continue to support Air Berlin's restructuring.

Winkelmann also said Air Berlin was postponing some new long-haul routes, such as to Hong Kong, and would focus growth on Duesseldorf rather than its home of Berlin Tegel, while it waits for the capital's much-delayed new airport to open.

The 2016 net loss includes impairment and restructuring charges of 335 million euros on previous acquisitions and airport slots that are no longer being used and compares with a loss of 447 million euros for 2015.

For the first quarter, the net loss was 293 million euros, compared with 182 million a year earlier.

Air Berlin said it had sufficient liquidity and financing to continue restructuring.

Additional reporting by Peter Maushagen; Editing by Edmund Blair and Mark Potter

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