airberlin announced (07-Jan-2013) the appointment of Wolfgang Prock-Schauer as its new CEO, effective 07-Jan-2013. Mr Prock-Schauer, who was previously airberlin's chief strategy and planning officer, will succeed Hartmut Mehdorn who has been CEO on a transitional basis since 01-Sep-2011. Mr Prock-Schauer will also become an executive director on the board of directors of Air Berlin PLC. Mr Mehdorn will remain a member of the board. Air Berlin PLC board of directors chairman Hans-Joachim Körber thanked Mr Mehdorn for his contribution and welcomed Mr Prock-Schauer to his new position. Mr Prock-Schauer said, "airberlin is facing huge challenges. We must continue to push our process of change forward rapidly to become lean and smart, so that we can be successful in the global competitive environment. Together with my colleagues on the board of directors, the management board, and the employees of airberlin we will put all our effort into this task.” [more - original PR - airberlin] [more - original PR - airberlin II - German] [more - original PR - airberlin III - German]
airberlin appoints new CEO amid 'huge challenges' at the carrier
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Airberlin makes network cuts, refocusses on North America long haul and new premium product
Despite low fuel prices that have carried the global airline industry to record margins, airberlin's 2Q2016 losses have widened. This was its fifth successive quarter of unit cost growth outpacing unit revenue growth (they both fell, but unit revenue fell faster). Airberlin improved its cost structure, but CEO Stefan Pichler said that 2Q "was more challenging than expected on volumes and yield". It now seems likely that 2016 will be yet another year of red ink for airberlin, which is 30% owned by Etihad.
Airberlin's ongoing restructuring continues to involve capacity and headcount cuts to improve cost efficiency. In addition, airberlin is seeking cost synergies by coordinating some support functions with Etihad Airways Partners airlines.
Still predominantly a short/medium haul operator, airberlin is expanding its long haul network with new routes in the US and the Caribbean. This long haul expansion, accompanied by the launch of a short/medium haul premium product, attempts to position airberlin more squarely as a full service network airline. This is a further move away from its LCC past, just as LCCs are encroaching on long haul in addition to short haul.
airberlin continues to shrink. Etihad remains supportive, but internal solution is needed
airberlin's 2015 losses highlighted its ongoing struggle to find a successful model. In 2012 airberlin received investment from Etihad (also entering into a close commercial partnership with it) and joined oneworld. These moves have brought it benefits in terms of traffic and revenue, but traffic and revenue continue to shrink and airberlin has remained loss-making.
Since 2011 airberlin has cut capacity heavily on the short/medium haul network (particularly in domestic markets). Short/medium haul still dominates airberlin's operation, but it is now growing its long haul network aggressively by adding capacity to North America and the Caribbean. Squeezed between lower-cost LCC competition on short/medium haul routes on the one hand, and legacy airlines with bigger long haul networks on the other, it is also now facing low cost long haul competition from Lufthansa's Eurowings.
On 31-May-2016 the Etihad Aviation Group CEO, James Hogan, said: “airberlin has faced greater challenges and has taken longer than we expected to reach sustainable profitability, but the underlying fundamentals of the business are trending in the right direction." Etihad's investment has been critical to airberlin's survival and the airline has, so far, remained committed to the relationship. However, there is only so much that Etihad can do from the outside. airberlin needs internal solutions.