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Air Berlin eeked out a profit in 2011 by selling its frequent flyer program to Etihad Airways, but ongoing delays to its city’s new airport is hurting the airline’s ability to launch more profitable routes.

Air Berlin Plc will cut 900 jobs, almost 10 percent of the workforce, at Europe’s third-largest discount airline and extend fleet reductions in a push to save 400 million euros ($535 million) by the end of 2014.

The turnaround plan, which began on Oct. 18, will focus Air Berlin on its main markets and impose a more stringent business model, the German company said in a statement today. Air Berlin will pare the fleet to 142 aircraft this year from 158 now, more than previously planned, and that it can’t exclude firings.

The airline announced the measures a week after Wolfgang Prock-Schauer took over as chief executive officer from Hartmut Mehdorn, who had begun a revamp to return the airline to profit following successive annual losses since 2008. The carrier is part owned by Abu Dhabi-based Etihad Airways PJSC, and Prock- Schauer, a 56-year-old Austrian, joined Air Berlin in October as head of strategy and planning.

The Berlin-based carrier, Germany’s biggest after Deutsche Lufthansa AG, rose as much as 0.35 euros, or 2.1 percent, to 1.74 euros in Frankfurt, and traded at that level at 12:31 p.m. The shares, which first sold to the public in 2006 at 12 euros each, have added 11 percent so far in 2013, valuing the company at 199 million euros.

Air Berlin had a loss of 271.8 million euros in 2011, more than double the deficit of 2010. The company lost 119.8 million euros in 2012, according to the average analyst estimate collected by Bloomberg.

The airline will focus on Germany, Austria and Switzerland, while also adding flights to the Spanish island of Mallorca, a favorite holiday destinations among Germans.

Etihad, the third-biggest Gulf carrier, has a code-sharing program with Air Berlin and owns a 29 percent stake, pushing into Lufthansa home turf. On Dec. 18, Etihad said it will buy a controlling stake in Air Berlin’s frequent-flier program for 184.4 million euros, helping the German eek out a profit for last year.

Editors: Benedikt Kammel and Christopher Jasper.

To contact the reporter on this story: Richard Weiss in Frankfurt at [email protected]. To contact the editor responsible for this story: Benedikt Kammel at [email protected].


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Tags: air berlin

Photo credit: An Air Berlin flight takes off. Silvio Kelch / Flickr

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