After lots of speculation over the last weeks the Air Berlin Board of Directors has now confirmed a massive restructuring of the company that will see the fleet shrink to just 75 aircraft.
In addition management also confirmed that up to 1,200 full time equivalent staff will be laid off and the company will work with the employees council to complete this process until spring 2017.
This announcement came faster than anticipated even though the big german newspapers reported details earlier this week (LoyaltyLobby wrote about it here).
The restructuring also includes giving away 40 aircraft and staff to Lufthansa, respectively it’s subsidiary Eurowings under a wet lease agreement.
Air Berlin has published a press release (access here) about this drastic step that will hopefully save the airline from going under.
The Board of Directors of Air Berlin PLC has resolved today to substantially restructure the group and implement a new business model. As a dedicated network carrier, Air Berlin PLC & Co. Luftverkehrs KG will operate a reduced core fleet of 75 aircraft in a dual-hub strategy with long-haul flights from Berlin and Dusseldorf. All administrative functions will be concentrated in Berlin. The touristic business with 35 aircraft will be combined in a separate business unit with a view to evaluate strategic options.
To more efficiently employ excess aircraft and crew capacity, Air Berlin PLC & Co. Luftverkehrs KG intends to provide up to 40 Airbus A320 family aircraft to the Deutsche Lufthansa group with up to 38 aircraft operated by Air Berlin PLC & Co. Luftverkehrs KG under a six year wet lease agreement.
The restructuring of the group will necessitate lay-offs of up to 1,200 employees (full-time equivalents). The Air Berlin group endeavours to implement these redundancies in a close and constructive collaboration with employee representatives. Further, discussions are being held with the unions representing cockpit and cabin staff in order to reach a framework for new collective works agreements, which are economically more beneficial for the company.
No announcement has been made yet in regards to further negotiations that could see additional aircraft from Air Berlins subsidiary AirNiki go to touristic carrier TUIfly.
1,200 jobs lost is 200 more than reported earlier. Lufthansa made the decision to engage in the deal with Air Berlin to avoid having to deal with further competition with low cost carriers Ryanair and Easyjet who could fill the void should Air Berlin suddenly falter.
In an interview with Sueddeutsche Zeitung (see here – in German) Lufthansa spokespeople said that they prefer to further position their own Eurowings low cost product in a fast pace and that dealing with competitor such as Ryanair would be much more difficult than to engage with Air Berlin.
I think this is the right decision on many levels. Air Berlin has only turned a profit once and in the last year the carrier posted a deficit of 450 Mio Euro. This can’t go on forever, even majority shareholder Etihad likely didn’t imagine the depth they’ve gotten themselves into.
For the cockpit and cabin crew it’s also a decent outcome to be transferred to Eurowings rather than being completely out of a job and having to find alternative employment on their own. Hopefully Air Berlin will be able to shrink itself healthy again with this step.