In the third quarter of 2007, the Air Berlin Group transported 12 percent more passengers than during the corresponding quarter of the previous year, increased its fleet capacity utilization by 2.3 percentage points, raised its sales volume by 7.2 percent and, with net profit exceeding EUR 60 million, achieved the highest quarterly net profit in its corporate history.

 

However, Management is not entirely satisfied with this performance. Due to the delayed LTU acquisition, the envisioned synergy effects did not reach their full potential. One-time charges for integration and restructuring totaled EUR 13 million.

The Group consisting of Air Berlin, dba and LTU (the latter included for the months of August and September) increased its seating capacity in the third quarter of 2007 by 8.9 percent in comparison with the corresponding quarter of the previous year. The fleet increased to 126 aircraft from 118. The number of passengers welcomed on board increased by 12 percent, and with 8.08 million passengers transported, the seat load factor improved from 81.5 to 83.7 percent. Sales volume increased from EUR 799.9 million to EUR 857.6 million, i.e. an increase of 7.2 percent. Whereas EBITDAR (Earnings before interest, taxes, depreciation, amortization and leasing expenses) increased by 12.5 percent from EUR 155.4 million to EUR 174.8 million, EBIT (Earnings before interest and taxes) increased by merely 0.7 percent from EUR 69.6 million to EUR 69.8 million. Lastly, due to favorable financial and tax results, net profit increased from EUR 50.9 million to EUR 60.8 million (+19.4 percent).

"Synergies to take effect in 2008"

As Joachim Hunold, Air Berlin’s CEO, stated in Berlin on Tuesday (20 November 2007): "Despite the good performance in the third quarter, these figures put us in the lowest bracket of our planning for the nine-month period. This state of affairs is partially due to the modest performance in the second quarter and also to the circumstance that we were not able to integrate LTU prior to 8 August. Only from that point in time onwards were we able to optimize LTU’s yield management and capacity control. It was not possible to eliminate overlapping flights between Air Berlin and LTU due to the elevated number of reservations. Therefore, we have not yet been able to realize the planned synergy effects to their full extent. We had to take a one-time charge for integration and restructuring measures amounting to EUR 13.2 million. However, in 2008, these synergies will take effect."

On the right track with cost reduction

Ulf Hüttmeyer, Air Berlin’s Chief Financial Officer, commented on the individual results as follows: "Due to the competitive environment, the introduction of new flight routes and increased flight frequencies, and the introductory prices associated therewith, revenue per passenger decreased by 4 percent to average EUR 106. Profit per available seat kilometer decreased by 1.2 percent, i.e. from 5.84 to 5.77 Eurocents. Nevertheless, this development was significantly more stable than in the second quarter, during which the decline in yield still exceeded 5 percent. Despite the charge for restructuring, we succeeded in cutting cost at the EBITDAR level by 2.6 percent, and in increasing the margin by one percentage point to 20.4 percent of sales revenue. Due to the increased costs for wet leases, EBIT, with a margin of 8.1 percent, is only slightly below that of the previous year (8.7 percent). With almost EUR 70 million, Air Berlin’s operating income lies, just like the sales volume, at the lower end of our planning range, which was between EUR 68 million and EUR 81 million. However, at more than EUR 60 million, net income has exceeded our expectations. We had anticipated a net income between EUR 48 million and EUR 57 million. Over the first nine months, we earned EUR 31 million, as compared to EUR 34 million in the corresponding period of the previous year."

Chief Executive Officer Joachim Hunold concluded: "We have now laid the foundations for optimally positioning ourselves strategically for the future. As of now, we will concentrate on cutting additional costs. 2008 will be the year of increased profit for the Air Berlin Group."