Published On: Sat, Oct 1st, 2016

Airberlin to wet-lease aircraft to Lufthansa as part of restructuring

airberlinBERLIN - German carrier airberlin has released details of its restructuring plan, which hinges on placing up to 40 Airbus A320s with Lufthansa Group and reducing employee positions by up to 1,200.

In a statement recently released, airberlin said it would refocus its operations on being a network carrier serving higher-yield markets from Berlin and Dusseldorf using a fleet of 75 aircraft.

The airline’s leisure business will be folded into an independently operating unit, airberlin said.

The restructuring plan, widely anticipated, will be “far-reaching,” airberlin CEO Stefan Pichler said.

Airberlin is Germany’s second-largest airline, carrying more than 30.2 million passengers in 2015, and a member of the oneworld global alliance. Abu Dhabi-based Etihad Airways has a 29.2% stake in the airline. Airberlin reported a 446.6 million loss euros ($485.5 million) for 2015, deepened from a €376.7 million loss the year before. It then reported an €89.1 million net loss for the 2016 second quarter, widened from a €37.5 million loss in 2Q 2015. For the 2016 first half, losses totaled €271.5 million loss.

Lufthansa Group has been in talks for some months to potentially buy routes and acquire aircraft from airberlin so that it can more rapidly grow its low cost carrier unit Eurowings.

Of the up to 40 A320s that will be placed with Lufthansa Group, up to 38 aircraft will be provided under a six-year wet-lease agreement, airberlin said.

Lufthansa Group said in a statement that the agreement, which is subject to its board’s approval, would enable Eurowings to significantly expand its capacities and strengthen its position in the European point-to-point air transport market. It said 35 of the aircraft would fly in Eurowings livery while five would be leased by Austrian Airlines, a Lufthansa Group carrier.

Eurowings currently operates a total fleet of 90 aircraft, all Airbus manufactured. The additional aircraft will be based at seven airports in Germany, Vienna and Palma de Mallorca, Spain.

Airberlin’s core fleet, meanwhile, will consist of 17 Airbus A330s 40 A320s and 18 Bombardier Q400 turboprops from the summer of 2017.

Redundancy talks will begin with the aim of confirm voluntary and compulsory layoffs by February 2017, airberlin said.

“We are faced with significant external market pressures, which dictate a change to our current complicated business model. Airberlin has sought to serve all market segments with one operating platform, covering both business and leisure travelers,” Pichler said.

“The core airberlin proposition in future is now clear: a dedicated focused network carrier serving higher-yielding markets from two hubs in Dusseldorf and Berlin. A leaner, fitter, stronger airberlin has a bright future.”

Under the new plan, airberlin’s profitable long-haul operations will be expanded with new routes and additional frequencies, particularly to the US while its short- and medium-haul operations will concentrate on business markets in Italy, Scandinavia and Eastern Europe as well as growing its domestic German business market.

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