airberlin announced that it has recorded a 5 per cent decline in revenue to 1.23 billion euros in the third quarter of 2016, compared to 1.3 billion in 2015 Q3.
Earnings in the third quarter of 2016 were also influenced by ongoing weak demand in the tourism industry.
Responding to the continuing decrease in tourist traffic in the Eastern Mediterranean due to the threat of terrorism, numerous airlines, including airberlin, continued to shift their capacity towards the tourist destinations of Palma de Mallorca and the Canary Islands during the peak summer travel period, which were core markets for airberlin in Q3. The subsequent price pressure in the target markets persisted throughout the quarterly reporting period and had a negative effect on airberlin’s financial results.
Stefan Pichler, CEO of airberlin, said:
“Due to increased market pressure, particularly in the tourism sector, the third quarter did not meet our expectations, and conditions remain challenging for our sector as a whole. However, we have announced a far-reaching and strategic restructuring for airberlin to set the airline on the right path for the long term.
“The restructuring is aimed at significantly improving our future efficiency, revenue and profitability as a dedicated network carrier with profitable routes. The extraordinary one-off expenses that this requires placed a significant burden on the financial results in the third quarter.
“The transatlantic business is one of the key elements of the ‘new airberlin’, as is evident in the ongoing expansion of long-haul flights to the USA and our focus on premium traffic to improve our sales revenue. This is why in the spring of 2017, we will expand our long-haul fleet with three additional A330-200 aircraft. This expansion of our long-haul fleet and harmonisation to an all-Airbus fleet are important components of our restructuring plan.”
Operating earnings (EBIT) fell to 55.81 million euros before restructuring costs during the reporting period (Q3 2015: 81.4 million euros). EBIT after restructuring costs for fleet harmonisation, personnel provisions and consulting services amounted to -17.3 million euros.
- Due to restructuring costs, net earnings in the third quarter fell to -45.6 million euros (Q3 2015: 56.2 million euros).
- Revenue per available seat kilometre (RASK, total revenue) declined by 5.5 per cent to 7.40 eurocents in the third quarter of 2016 (Q3 2015: 7.83 eurocents).
- Ancillary revenues increased significantly by 21 per cent from 5.56 euros (Q3 2015) to 6.72 euros per passenger, driven by the broader ancillary service offering available to our guests.
- Yield – from flight sales per revenue passenger kilometre (RPK) – fell by 6.6 per cent to 7.52 eurocents in the third quarter (Q3 2015: 8.05 eurocents).
- Average revenue declined by 3.5 per cent from 121.40 euros to 117.16 euros.
- The load factor increased by 0.4 percentage points to 88.64 per cent (Q3 2015: 88.29 per cent).
airberlin provided 16.63 billion available seat kilometres (ASK) in the third quarter, adjusting its capacity to reflect the volatile market trend. This equates to an increase of 0.1 per cent (Q3 2015: 16.62 billion). The number of revenue passenger kilometres (RPK) rose by 0.5 per cent to 14.74 billion (Q3 2015: 14.67 billion).
Unit costs (CASK, incl. fuel) decreased in the third quarter of this year by 5.5 per cent from 7.43 eurocents to 7.02 (including restructuring costs: 7.46 eurocents). Total costs decreased by 5.4 per cent to 1.167 billion euros (including restructuring costs: 1.241 billion euros), compared to the third quarter of 2015 (Q3 2015: 1.235 billion euros).
The ongoing network adjustment enabled a reduction in external costs, in particular a fall of 1.4 per cent in airport taxes and handling, and of 5.5 per cent for navigation costs.
Stefan Pichler added:
“airberlin is in the middle of a strategic restructuring against the background of a difficult market environment for the aviation industry. While the fourth quarter will not bring a significant operational improvement for airberlin, we are confident of being able to announce progress with our restructuring in the foreseeable future. This should lead to a significant improvement in our strategic positioning and financial situation.
“The aim is to improve the efficiency of airberlin, offset seasonal fluctuations, reduce costs and re-establish a clear and successful market position for the future of our airline.”