Airberlin: still in need of a cap that fits, although 1Q2014 operating loss narrows slightly

Airberlin's 1Q2014 results do not add much to the public understanding of its business. Probably the most important recent development has been confirmation of the balance sheet recapitalisation announced in Apr-2014. Without this, which relies largely on funds from 29% shareholder Etihad, airberlin would have been in dire straits.

But the fortunate reality is that Airberlin now has breathing space to focus on cutting its CASK and raising its RASK, following years of both rising (but CASK rising faster). In 1Q2014, both fell and airberlin modestly narrowed its operating loss by cutting CASK slightly more than the drop in RASK. Its Turbine cost programme is making itself felt, but the shift in Easter hurt revenues.

In another important development, airberlin has begun the fundamental restructuring announced in Apr-2014. It has a still fairly new CEO and an influential airline shareholder; this process has now introduced a newly appointed Chief Restructuring Officer and external consultants. Previous restructurings and strategic changes have failed to assure a sustainable business model, but perhaps one of them will manage it this time.