EANS-News: Air Berlin PLC / airberlin announces far-reaching measures

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Financial Figures/Balance Sheet/6-month report/Q2 figures 2011

Subtitle: • Aviation tax hampers return to profitability – Hunold
criticizes distortion of competition • Additional burden on earnings
caused by the increased kerosene price and the decline in North
Africa-related business • "Shape & Size" program strives to make
company more profitable • 2nd quarter: Increased revenue, improved
yield and capacity utilization, costs before kerosene prices and
aviation tax reduced

London/Berlin (euro adhoc) - airberlin, Germany's second-largest
airline company, has launched "Shape & Size", a comprehensive program
aiming to make the company profitable in the future. The package of
measures includes, inter alia, a capacity reduction by more than one
million seats in the second half of 2011 and the ensuing reduction of
the fleet by 8 aircraft, the cancellation of unprofitable routes,
flight frequency reductions, the partial withdrawal from regional
airports, and the concentration on the Berlin, Düsseldorf, Palma de
Mallorca and Vienna hubs. At the presentation of the figures for the
2nd quarter of 2011 (Q2), Joachim Hunold, airberlin's CEO, stated in
Berlin on Thursday that an improved capacity utilization, an increase
in the revenue per passenger, and cost reductions had not sufficed to
offset the higher costs resulting from the aviation tax and the
increased kerosene price, and the decline of Egypt-related business
which traditionally forms an important contribution to the airline
company's revenue, but has declined due to the unrest in Northern
Africa. "In order to become profitable, we need to make cuts in our
flight routes and in our fleet," stated Hunold. Among the
unprofitable flight routes to be cancelled, airberlin's CEO
mentioned: Frankfurt - Hamburg, Frankfurt - Naples, Stuttgart - St.
Petersburg, Munich - Cairo, and Düsseldorf - Paris.

Hunold cited the regional airports as the casualties of the aviation
tax. For example, airberlin will stop operating its flight
connections from Münster/Osnabrück to London, Vienna and Sylt. The
same applies to the connections from Cologne/Bonn to various
destinations in Morocco and to Valencia. Furthermore, airberlin's
direct flights from Cologne to Innsbruck, Naples and Palermo will no
longer be available during the winter months. The Hanover - London
route will be cancelled. As of November, Karlsruhe, Dresden and Basel
will no longer offer direct flight connections to Palma de Mallorca
over the winter. Flights from Paderborn to London and Manchester will
be a thing of the past. Furthermore, in numerous airports, airberlin
will reduce flights to Malaga and Alicante or - as is the case in
Klagenfurt - no longer offer these destinations, at least over the
winter. In Erfurt, airberlin will give up its presence completely.

As Hunold emphasized: "The aviation tax is causing a dramatic
distortion of competition. In relation to revenue, we have to pay
almost four times as much as our largest competitor." Whereas
airberlin, with a revenue of EUR 1.8 billion in the first half of
2011, had to pay approximately EUR 74.4 million (4.1 percent of the
revenue) of aviation tax, our largest competitor in Germany, with a
total revenue of EUR 14.1 billion, only had to pay EUR 162 million
(1.15 percent of the revenue). Hunold stated: "The aviation tax
together with the existing competitive pressure makes it impossible
to, e.g., pass on the increased kerosene price to the customers in
its entirety. In order to prevent yet further damage to the already
low-margin airline traffic in Germany, the aviation tax should be
abolished as quickly as possible."

"The planned measures will possibly not suffice to obtain a positive
operating result at the end of the year, since some of the savings
related to the measures will not become effective until next year,"
explained Hunold.

Ulf Hüttmeyer, airberlin's CFO, emphasized that the company was on
the right track towards consolidation. In the second quarter of 2011,
the yield (revenue per passenger) increased to EUR 107.68, i.e. 6.5
percent more than in the second quarter of the previous year. At the
same time, the seat load factor increased by 3.6 percentage points,
to 77.4 percent. Considerable progress was also made with respect to
cost reduction (excluding aviation tax and kerosene). In total, this
figure amounts to approximately EUR 111 million.

"However, the demand for flights to the tourist destinations in
Northern Africa, which are of significant importance to our company,
has not recovered in the aftermath of the unrest." Hüttmeyer cited
the example of Egypt, a destination to which airberlin usually flies
about 80x per week. For weeks on end, there were no airberlin flights
to Egypt at all, and only in March this year, were flights to Egypt
gradually resumed. The same was the case for Morocco and Tunisia.
Overall, in the second quarter of 2011, capacity for North
Africa-bound flights was reduced by 25 percent in comparison with the
second quarter of the previous year. Hüttmeyer calculated that the
loss related to this reduction alone amounted to EUR 20 million for
the second quarter. This figure, together with the additional cost
for the increased kerosene price of at least EUR 71 million and the
aviation tax of approximately EUR 45 million, amounts to at least EUR
136 million.

The airberlin hubs in Berlin and Düsseldorf are developing in a
positive manner. One year prior to the opening of the new Berlin
airport, Berlin Brandenburg Willy Brandt (BER), airberlin's hub is
offering 9,000 flight connections per week, more connections than
ever before. In June 2011, following a continuous period of growth,
the share of transit passengers reached 17 percent. The highest
percentage recorded so far on a single day was approximately 23
percent. airberlin's Düsseldorf hub is equally successful, and
airberlin was able to increase the passenger volume for the first six
months of the year by 9 percent over the previous year. In June, the
share of transit passengers at the Düsseldorf hub amounted to 16
percent, and the highest percentage recorded so far on a single day
was approximately 20 percent. A total of 4,400 flight connections per
week are available. The hub in Palma de Mallorca benefited from the
new hub structure established in 2010. In the summer of 2011, the
number of connections was increased by 15 percent over the summer of
the previous year. Starting from the winter flight schedule, the
Vienna airport will move more into the direction of a hub as well. In
this manner, the airberlin group will offer more transit connections
and increased flight frequencies to Eastern Europe (Belgrade,
Bucharest, Sofia) and on the North-South axis (e.g. Hamburg - Sofia)
as well as improved departure times.

As Joachim Hunold, airberlin's CEO, commented: "Our hubs are already
running smoothly, and we are further expanding them. By adding just a
single new flight route, we are able to provide several new transit
combinations. The hub concept enables us to offer new destinations
more rapidly, and to fly long-distance routes in a profitable
manner."

Hunold called the previously agreed codeshare agreements with
airberlin's future partners in the oneworld® airline alliance a
success story. Since the beginning of this year, airberlin had
already registered about 100,000 codeshare bookings from customers of
the partner airlines. In North America alone, airberlin is currently
offering flights to 35 destinations in the United States, Canada,
Puerto Rico and the Bahamas.

In the second quarter, Air Berlin PLC increased its revenue from EUR
877 million (Q2 2010, including NIKI: EUR 957.9 million) to EUR 1.1
billion, i.e. an increase of 27.3 percent over the corresponding
period of the previous year. Despite revenue being lower than
planned, and the additional cost related to the oil price, EBITDAR
(Earnings before interest, taxes, depreciation, amortization and
leasing expenses) increased from EUR 124.3 million (Q2 2010,
including NIKI: EUR 129.6 million) to EUR 142.3 million; EBIT
(Earnings before interest and taxes) decreased from EUR -28.2 million
(Q2 2010, including NIKI: EUR -27.8 million) to EUR -32.2 million.
Without the aviation tax, EBIT would have amounted to EUR 12.2
million. The financial result decreased from EUR -39.7 million (Q2
2010, including NIKI: EUR -40.5 million) to EUR -47.3 million.

Air Berlin PLC's total equity amounts to EUR 308.3 million (2010: EUR
490.9 million), and net indebtedness amounts to EUR 616.1 million
(2010: EUR 493.4 million).

Further inquiry note:
Uwe Berlinghoff
Director Corporate Communications airberlin
phone: +49 30 3434 1500
fax: +49 30 3434 1509
e-mail: abpresse@airberlin.com

end of announcement euro adhoc
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company: Air Berlin PLC
The Hour House, High Street 32
UK-WD3 1ER Rickmansworth, Herts
phone: +49 (0)30 3434 1500
FAX: +49 (0)30/3434-1049
mail: abpresse@airberlin.com
WWW: http://www.airberlin.com
sector: Air Transport
ISIN: GB00B128C026
indexes: SDAX, Classic All Share, Prime All Share
stockmarkets: regulated dealing/prime standard: Frankfurt, free trade: Berlin,
Hamburg, Stuttgart, Düsseldorf, München
language: English