Air Berlin to sell planes to improve equity ratio

FRANKFURT Wed Aug 15, 2012 4:30am EDT

A German carrier Air Berlin aircraft takes off at Berlin's Tegel airport, May 22, 2012. REUTERS/Fabrizio Bensch

A German carrier Air Berlin aircraft takes off at Berlin's Tegel airport, May 22, 2012.

Credit: Reuters/Fabrizio Bensch

FRANKFURT (Reuters) - Loss-making Air Berlin will sell eight of its planes in order to improve its equity ratio, which plummeted in the first half of the year to just 4 percent.

Air Berlin (AB1.DE), which has not posted an annual operating profit since 2007, is trying to shrink its way back to profitability after growing rapidly and racking up debt. Abu Dhabi-based Etihad Airways, which holds a 29 percent stake, has also provided loans.

Germany's second-biggest carrier after Lufthansa (LHAG.DE) said last week its equity had plummeted by about two-thirds to 101.3 million euros by the end of June.

That gave it an equity ratio of 4 percent, compared with 11.2 percent as at end Dec 2011. By the end of July, its equity had improved by 60 million euros already, it said on Wednesday, adding that the ratio should be higher at the end of 2012 than the end of last year.

It said on Wednesday it decided in the second quarter to sell eight of its own aircraft, although transactions had not been completed by end-June.

"The sale is expected to result in a profit. Both the equity ratio and the liquidity position will noticeably benefit from the transaction," the airline said in its interim report on Wednesday.

It last week reported its second-quarter loss widened to 66.2 million euros due to soaring fuel costs, the euro's weakening against the U.S. dollar and a German air travel tax. (Reporting by Victoria Bryan; Editing by Alison Birrane)