Air Berlin expecting to achieve operating profit target
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Airberlin: airline's latest, more radical, restructuring gets help from TUIFly and Lufthansa
Airberlin's operations are to be split into three. First, there will be a core network airline with hubs in Berlin and Duesseldorf, deploying approximately half the current Air Berlin Group fleet. Second, there are plans for a new leisure airline, combining part of airberlin's fleet with TUIFly. Third, a significant part of airberlin's fleet will be wet-leased to the Lufthansa Group.
As a result of these moves the operating fleet of the core airberlin network airline will slip from second to third in Germany and risks becoming subscale. Eurowings will rise from third to second, and the expanded new TUIFly will go from fifth to fourth (overtaking Thomas Cook Group's Condor).
For several years airberlin has been unable to break the cycle of losses and successive restructuring initiatives, in spite of repeated bailouts from airberlin's 29% shareholder Etihad. A number of details are still to be clarified. These include the detailed route networks for the different operators, the network airline's strategy for feed, and the balance of charter versus scheduled flights in the new leisure airline. However, for now and with help from competitors and Etihad, airberlin looks to have ensured at least some kind of future.
European airlines: 1H2016 results show a widening gap between the haves and have-nots
The last of Europe's leading listed airline groups reported 1H2016 results on 19-Sep-2016. This now allows analysis of the aggregate trends for the 15 largest European airline groups listed on the stock market that publicly report financial results for the first six months of the calendar year. These groups account for 53% of ASKs flown to/from/within Europe by all airlines and 71% of ASKs flown by European airlines (week of 19-Sep-2016, source: OAG).
Collectively, these 15 groups enjoyed an improvement in operating margin in 1H2016 versus 1H2015. This was achieved in spite of heavy downward pressure on unit revenue – thanks largely to lower fuel prices, which allowed them to cut unit costs more rapidly. However, there was a wider range of levels of profitability in the individual results compared with last year.
Moreover, in margin terms, there was a trend towards the strong getting stronger and the weak getting weaker. Further, there has been a number of profit warnings in the sector – particularly since the UK's Brexit referendum. This may mean that further improvements in the aggregate results of Europe's listed airline sector will be harder to achieve in 2017.