Opening Berlin’s airport won’t solve all of Air Berlin’s problems, but it could boost profits and allow the low-cost airline to launch new routes. Despite the airline and airport’s demise, Berlin has become one of the most popular European destination.
Pilots at Air Berlin Plc, Europe’s third-biggest discount carrier, plan a short-term strike sometime in coming days in a push for higher pay, arguing they aren’t the ones to blame for losses at the company.
The carrier should make up for wages that lag behind the average at competitors by at least 10 percent, Markus Germann, chief negotiator for the Vereinigung Cockpit pilots union, said. Air Berlin needs to narrow its business focus rather than basing a turnaround push on employees’ concessions, he said.
“Air Berlin is doing a little bit of everything: touristic flights, city shuttles and business passengers,” Germann said. “That strategy obviously doesn’t work, and that’s not the pilots’ fault.”
The airline outlined a strategy in January of reducing its fleet and cutting 900 jobs, or 10 percent of its workforce, in a push to increase earnings by 400 million euros ($535 million) by 2014. Air Berlin, based in the German capital, posted its first annual net income since 2007 last year only after selling control of its frequent-flier program to Etihad Airways PJSC, the carrier’s biggest investor.
Germann declined to specify the union’s demand beyond saying he wants a “strongly improved offer” from Air Berlin that would raise pilot wages in about three years to the average paid by Deutsche Lufthansa AG’s Germanwings low-fare unit, TUI AG’s competing TUIfly division and Thomas Cook Group Plc’s Condor charter brand. He also declined to give dates or times for the warning strike.
Air Berlin made “a fair offer” to pilots on May 12, said Mathias Radowski, a spokesman, declining to give figures. The company will do everything it can to minimize effects of any strike, he said.
Cumulative losses in the four years prior to 2012 amounted to 610.6 million euros, according to data compiled by Bloomberg, and the first-quarter loss in 2013 totaled 196.4 million euros. The company plans to generate an operating profit this year, and reduce net debt to 500 million euros from 728 million euros on March 31.
The company is also suffering from capacity constraints at its Berlin home hub after the opening of a new airport being built in the city was delayed.
Productivity at the company’s namesake brand is declining as Air Berlin shifts routes to partner airlines abroad, Germann said. The airline currently employs almost 1,300 pilots, according to the labor representative.
Etihad, the Abu Dhabi-based airline that’s the third- biggest Persian Gulf carrier and the owner of a 29 percent stake in Air Berlin, said in May that it’s recruiting pilots from the German partner amid an expansion drive by the Middle Eastern company.
Editors: Tom Lavell and Robert Valpuesta.
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Photo credit: Air Belin jets sits at Munich Airport. Marcus Bolt / Flickr