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Why Air Berlin no longer owns a single aeroplane
Photo: DPA

Why Air Berlin no longer owns a single aeroplane

The Local · 11 Jul 2016, 10:57

Published: 11 Jul 2016 10:56 GMT+02:00
Updated: 11 Jul 2016 10:57 GMT+02:00

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The airline reported three percent fewer passengers and a decline in seat bookings compared to last year in late June, and the Brexit vote has served to complicate matters further.

London bank HSBC has reduced the target price of Air Berlin shares from €0.10 to €0.01. In May, it had already slashed the target price from €1.20 to €0.65, saying that cheaper flights to continental Europe would mean more competition for Air Berlin.

Budget airline Ryanair has just opened a new base in Berlin, whilst EasyJet is also expanding and Lufthansa is growing its low-cost Eurowings operation.

Spokesperson Uwe Kattwinkel confirmed to Tagesspiegel that the airline had sold its final plane, adding that they would not be speaking publicly about the details of the transactions. "It is correct that the Air Berlin fleet consists solely of leased planes," he said.

Leasing aircraft - with or without staff - is not unusual in the industry and allows airlines to be flexible, however it is unusual for an airline to lease the entirety of its fleet.

Those who lease must pay fees to the aeroplanes' owners, and do not benefit from the security of owning aircraft. Lufthansa, for example, Germany’s number one airline, owns 80 percent of its planes.

So what does this mean for passengers?

Air Berlin flights will still be operating, and bookings which have already been made are not in danger. At the end of the first quarter in 2016 there were 148 (leased) aircraft in the Air Berlin fleet. But the long-term future of the airline is less certain.

HSBC predicted that Air Berlin is likely to face "acute pressure to deliver a radical restructuring" in an "unsupportive" environment, as low-cost options become more competitive.

Story continues below…

The company had already announced in 2015 that by the end of this year, the entire fleet will be made up of short- and medium-haul airbus jets, in order to reduce costs. Having only one kind of plane is taking a leaf out of Ryanair’s book; for several years, the budget airline has flown only with the Boeing 737.

Kattwinkel tried to reassure passengers and shareholders that the impact of Brexit would be limited. Although the holding company which owns shares in Air Berlin is a PLC and subject to British law, the airline itself is a German company so will continue to receive the route rights of German and European authorities.

Kattwinkel added: “Of course, we are watching and evaluating the early developments."

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