airberlin shows improved net earnings in the first quarter of 2016

Dino D'Amore
By Dino D'Amore May 12, 2016 18:12

airberlin shows improved net earnings in the first quarter of 2016

airberlin improved its net earnings during the first quarter by 13% to report a loss of €182.3 million compared to a €210.1 million loss in the first quarter of 2015.

The capacity was reduced by 6% in the first quarter of 2016 and passenger volumes decreased accordingly by 6.8% to 5,416,618 million. During the first quarter, passenger revenue declined by 9% to €630.3 million, with flight revenue per passenger decreased by 2% to €116.36.

Due to the reduction in capacity, airberlin also showed a decline in consolidated revenue of 7% to 737.1 €million during the first quarter of fiscal year in 2016.

Total revenue per available seat kilometre (RASK) at 6.71 euro cents remained stable. The yield – from flight revenue per RPK – declined by 1.7% per cent to 6.89 euro cents. Overall, ancillary revenue significantly improved by 20% to €49.708 million, representing an increase by 28.7% per passenger. The positive development of ancillary revenues leading to a stable consolidated yield of 8.05 euro cents.

The capacity utilisation, as measured by the load factor (RPK/ASK), improved by 0.2 percentage points to 83.4%. The available seat kilometres (ASK) decreased by 7.2% to 10.978 billion, while the sold seat kilometres (RPK) fell by 7% to 9.15 billion.

The unit costs (CASK) increased by 1.4% from 8.20 euro cents to 8.32 euro cents compared to the same quarter last year. At constant currency the unit costs declined by 4.0% to 7.87 euro cents. The total costs declined by 5.9% to €913.1 million.
Stefan Pichler, Chief Executive Officer airberlin, commented. “The underlying fundamentals of our business are moving in the right direction, and we will see greater improvements in 2016, particularly in the second half of the year. We also expect positive earnings effects from fuel and foreign exchange in an annual amount of approximately 250 million euros, as our hedging positions from prior periods expire.”

Stefan Pichler added: “The protracted and damaging dispute over codeshare flights had a negative impact on our earnings in the first quarter 2016. Even if the decision by the Lüneburg Higher Administrative Court ultimately led to a satisfactory outcome for us and our partner Etihad Airways, this debate resulted in a significant loss of revenue and the market has taken months to regain confidence.”

Terrorism and overall geopolitical volatility continue to affect European aviation. This can be seen in the general downward trend in the tourism sector, especially to destinations in Egypt and Turkey. These factors, among others, caused airBerlin’s EBIT to decrease to a loss of €172.2 million compared to a €159.9 million loss in the prior-year period. At the same time, cash flow from operations improved to €22.1 million from €1.9 million in Q1 2015.

Pichler said: “We will do everything possible to improve our cost structure. The underlying fundamentals of our business are moving in the right direction and we have the support of our major shareholder Etihad Airways.”

“We aim to establish airberlin as a network carrier in the market. This includes expanding the transatlantic flights between Germany and the US to include new destinations such as Boston and San Francisco starting in May 2016, along with increasing the flights on offer for the long-haul routes. From Dusseldorf alone, airberlin offers 15 per cent more flights in the summer schedule compared to the previous year. This corresponds to a total of one million seats available for sale.”

In addition to its long-haul flights, starting in May, airberlin also expands its flight offer from Germany, Austria and Switzerland to Italy through closer commercial cooperation with Alitalia. The mutual passengers of airberlin and Alitalia will benefit from up to 25 per cent more weekly frequencies on non-stop flights to Italy including a new airberlin route from its Dusseldorf base to Bologna, with three flights a day, starting 2 May. airberlin also adds capacity from Dusseldorf to Florence and Venice with the current daily operation to both Italian cities increasing to three services a day.

Dino D'Amore
By Dino D'Amore May 12, 2016 18:12