Air Berlin Seeks New Niche to Tackle Lufthansa-EasyJet Squeeze

Air Berlin Plc (AB1) aims to end losses by
repositioning itself to cope with a squeeze from low-cost
carriers heading upmarket and network operators cutting costs,
said the executive leading the company’s strategy review.

The overhaul will seek to determine the best niche for Air
Berlin in the light of “convergence” among European airlines
spurred by the economic slump, said Marco Ciomperlik, who was
appointed to the new post of chief restructuring officer in May.

“There has to be change,” Ciomperlik said in an interview
today after the company’s annual shareholder meeting in London.
“Everything is up for consideration, the entire strategy.”

Air Berlin announced the review in April alongside a fresh
bailout of 300 million euros ($407 million) in convertible bonds
from investor Etihad Airways PJSC after the German company’s
annual pretax loss swelled to 305.2 million euros. Etihad Chief
Executive Officer James Hogan sits on the Berlin-based carrier’s
board and attended the investor gathering.

Air Berlin has suffered as discount rivals led by EasyJet
Plc (EZJ)
upgrade their service to target business passengers after
companies trimmed travel budgets, while family-friendly
enhancements announced by low-cost leader Ryanair Holdings Plc (RYA)
yesterday will also have an impact, the executive said.

Lufthansa Recruit

At the same time, Deutsche Lufthansa AG (LHA) is using its
Germanwings no-frills division to take over mainline flights
outside the Frankfurt and Munich hubs, improving their
viability, and Ciomperlik said Air Berlin will also study
reports that its German rival plans to use Dusseldorf-based
regional arm Eurowings as the basis for a second low-cost unit.

Ciomperlik said Air Berlin will unveil the new “holistic”
strategy in the third quarter, after CEO Wolfgang Prock-Schauer
earlier told investors that the company would provide more
information on the “fundamental review” during that period.

Goetz Ahmelmann, who joins Air Berlin as chief commercial
officer on July 1 more than six months after his appointment was
announced, will play a key role in determining how to reposition
the carrier, said Ciomperlik, who previously led a cost-cutting
drive at its maintenance division.

Ahmelmann worked for more than 20 years at Lufthansa, most
recently as European sales chief. Number-crunching and modeling
has already helped determine a range of options and those will
be put before him and other senior managers, Ciomperlik said.

Air Berlin is already cutting 900 jobs after accumulating
more than $1 billion of losses in six years, and while the
strategy overhaul may have some employment implications it is
essentially revenue-led and aimed at maximizing yields — a
measure of pricing — and occupancy levels, the executive said.

“You can’t claw back 300 million euros just through
cuts,” he said.

Air Berlin shares have slumped 16 percent this year after
declining in six years out of the last seven, reducing its
market value to 163 million euros.

To contact the reporter on this story:
Christopher Jasper in London at
[email protected]

To contact the editors responsible for this story:
Benedikt Kammel at
[email protected]