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airberlin outlines importance of oneworld membership; expects positive operating result in 2011

8-Jun-2011 10:46 AM

airberlin CEO Joachim Hunold, at the carrier's AGM, outlined (07-Jun-2011) the following opportunities, challenges and strategic focii for the carrier:

  • oneworld: Mr Hunold stated that becoming a member of oneworld is the most important decision airberlin has made since its public offering. He commented: "International networking offers a huge opportunity for growth. Therefore, we have already concluded codeshare agreements with American Airlines, Finnair and S7. The contracts with Iberia and British Airways will follow shortly ... Membership in oneworld provides the prerequisites for connecting to important markets in America and Asia ... Although the cost of becoming a member of the oneworld alliance will run in the lower two-digit millions, in the long term, under normal circumstances, we are expecting clear annual additional returns that exceed this one-time cost. The most important task lies in establishing compatibility with the booking systems of our future partners. To a large extent, this would have been necessary, even if we had decided not to become a member of oneworld, namely it would have been imperative to meet the current market requirements";
  • Middle East situation: Mr Hunold noted that 2011 is being burdened by political unrest in northern Africa with the carrier facing flight cancellations and losses in revenues at the start of 2011 due to the political unrest in Egypt and Tunisia with these services "still being booked reluctantly";
  • Air travel tax: Mr Hunold stated the company is burdened by the German air travel tax, which, for airberlin, constitutes approximately 4% of total revenue, and the increased cost of kerosene. "Furthermore, the air travel tax leads to a distortion of competition, since freight and transit connections are exempt from this tax," he explained;
  • Model: The CEO also stated that airberlin is "technically, personnel-wise and strategically well-positioned". He stated the carrier "will continue to hone our hybrid model which is being copied by an increasing number of our competitors";
  • Berlin-Brandenburg: airberlin sees the opening of the Berlin-Brandenburg International (BBI) Airport in Jun-2012. "Our hub in Tegel, which we have grown over the past year and which currently offers approximately 6000 flight connections per week, will be expanded with BBI so that we are able to provide our passengers with an even better service," he said;
  • Annual statements/Board appointments: The Annual Financial Statements were accepted with a large majority. In addition to CFO Ulf Hüttmeyer, Directors Barbara Cassani, Saad Hammad, Nicholas Teller, and Johannes Zurnieden were re-elected as Members of the Board;
  • Outlook: Mr Hunold stated general economic situation and the current booking status give airberlin reason to be optimistic. "I maintain that we can achieve a positive operating result despite the difficult first quarter of 2011, provided that the framework conditions remain manageable, in particular since we are also aiming to reduce cost by 100 million euros over this year and the next, by implementing our efficiency program 'Accelerate'. All our efforts are geared towards increasing the earning power of our company, i.e., in the medium term, reaching an EBIT margin of 4 to 5% in a normal year," Mr Hunold stated. [more]