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airberlin: in need of a cap that fits after another underlying loss

Analysis

Air Berlin PLC returned to a net profit in 2012 for the first time since 2007. However, if the one-off proceeds of the disposal to Etihad of 70% of its topbonus FFP are excluded, the operating result would have been a loss of EUR114 million. This is a narrower figure than 2011's shocking EUR247 million loss, helped by airberlin's entry into oneworld and its deepening strategic partnership with Etihad.

Wolfgang Prock-Schauer, CEO since Jan-2013 after only joining the company in Oct-2012, rightly assesses that "we have not yet reached our goal - namely sustainable profitability".

airberlin's cost structure is quite low versus European legacy carriers, but not LCCs, but its revenue base is too close to LCC levels. Thus the airline must simultaneously reduce costs and grow revenues. Further capacity cuts and another efficiency programme are under way, but much will depend on the further successful development of its relationship with oneworld and, in particular, Etihad.

After years of trying on every cap - charter carrier, LCC, full-service carrier, short-haul, long-haul, M&A predator and prey - airberlin needs to find one that fits.

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