Air Berlin postpones aircraft order

Air Berlin, whose chief executive stepped down this summer after failing to turn round the budget carrier, has delayed delivery of 19 aircraft it has on order from Airbus and Boeing.

The move helps Germany’s second-biggest airline by market share to better manage capacity as the industry braces for slowing demand. It also allows the carrier to conserve cash after several years of expansion battered its balance sheet.

“It clearly provides some short-term relief,” said Gert Zonneveld, an analyst at Panmure Gordon. The company has postponed by two years 11 Airbus A320s and eight aircraft from Boeing’s B737 category, which were originally set to be delivered next year and 2013.

The delay will save the company about $500m next year and $1.1bn the year after. Ulf Hüttmeyer, chief financial officer, said the moves “illustrate our co-operation with Airbus and Boeing, which is based on mutual trust”. The two main manufacturers are in a position of strength at the moment, thanks to healthy order books.

Air Berlin’s position is more precarious. It lost €165m ($230m) in the six months to June 30, €14m more than the previous year, on revenues that grew by a fifth to €1.9bn. Its net debt rose to €616m.

The company blamed a new German aviation tax, which it said cost it €74m in the half year, as well as disruptions to flights becuase of the Arab spring and higher fuel prices. It proposed adjustments to its fleet as the main corrective, but also said that it would refocus on its most profitable routes from hub airports.

Joachim Hunold, who founded the company and served at its helm for 20 years, presided over the results and the announcement of the turnround plan, but said he felt fresh blood was important to speeding up the restructuring. He resigned in August and was replaced for the interim by Hartmut Mehdorn, former chief executive of Deutsche Bahn.

Air Berlin has 168 aircraft, and said it still intended to take delivery of 31 planes in the next two years. The shares were barely changed at €2.64.

http://www.ft.com