Frankfurt: Air Berlin Plc announced the most sweeping job cuts in its history in a bid to rescue its ailing business, slashing its aircraft fleet by half as 40 jets are moved to arch-rival Deutsche Lufthansa AG and 35 others switch to a new tourism arm for which the company is evaluating options.
The equivalent of 1,200 full-time posts are likely to go from a current workforce of about 9,000 people, Air Berlin said in a statement after markets closed Wednesday. Shares of the unprofitable carrier rose on the news, gaining as much as 6.5 per cent in early trading Thursday.
The three-way fleet split will leave Air Berlin’s main airline with 75 planes based at its Berlin and Dusseldorf hubs, including 17 Airbus Group SE A330 wide-bodies deployed on long-haul flights.
Air Berlin has racked up more than 1 billion euros (Dh4.11 billion; $1.12 billion) of net losses in the past three years alone as it struggles to compete with Lufthansa and discount specialists including Ryanair Holdings Plc, even with the backing of Abu Dhabi-based Etihad, which owns a 29.2 per cent stake.
The A320-family narrow-body jets to be leased with crews to Lufthansa will expand its Eurowings discount unit, which will get 35 planes, boosting the fleet size by more than a third. The group’s Austrian Airlines arm will receive the other five to expand its Vienna hub.
Air Berlin said some people losing their jobs be able to transfer to other airlines in which investor Etihad Airways PJSC has a stake, though some may be fired. The carrier will also hold talks with unions for pilots and cabin crew to seek “economically more beneficial” labour agreements for remaining staff.
All administrative functions will be bundled in the German capital, while “strategic options” are being evaluated for the tourism business.
Air Berlin shares rose as much as 4.8 euros cents before trading up 3.8 cents, or 5.1 per cent, at 78 cents as of 9:13am in Frankfurt, paring the decline this year to 15 per cent and giving the company a market capitalisation of 91 million euros. The stock has lost more than 90 per cent of its value since first listing at 12 euros in 2006.
Lufthansa, which traded 3 per cent lower, said the aircraft it is taking — as many as 29 A320s and 11 smaller A319s — were available at “competitive market rates” and will be provided on six-year wet-lease terms, making Air Berlin responsible for their maintenance, as well as the provision of crews.
A final accord should be sealed in the fourth quarter and will require approval of the two companies’ boards and relevant competition authorities, it said.
Germany’s biggest airline earlier Wednesday announced another boost for Eurowings with its exercising of an option to acquire the 55 per cent of Brussels Airlines NV it doesn’t yet own. The Belgian carrier, which has almost 40 short-haul planes, will most likely be folded into the discount operation, Lufthansa said in April.
Brussels Air also uses nine A330s mainly for flights to west and central Africa.