Air Berlin operating profit rises; more cost cuts seen
FRANKFURT (Reuters) - German carrier Air Berlin on Wednesday reported its third-quarter operating profit rose 4.5 percent, mainly due to cost cutting, but said it needs to cut costs further to remain on track with its goal for sustained profitability beginning next year.
The company, Germany's second largest airline, said operating profit rose to 101.2 million euros, while net profit more than doubled to 66.6 million euros.
Third-quarter revenue increased 1.4 percent to nearly 1.40 billion euros
"Our target to return to profitability in the coming year remains unchanged," Chief Executive Hartmut Mehdorn said in a statement. But he said more cost cutting will be needed as the company confronts high fuel costs, the aviation tax, the postponed opening of the new Berlin airport, a weaker euro and dim economic prospects.
"We have come to the conclusion that we need to implement an additional turn-around program, Turbine 2013. ... Only in this manner, will we be able to further improve our operating performance in this negative environment and to sustainably be in the black from next year onwards," Mehdorn said.
Air Berlin said the measure of passengers carried as a proportion of available airplane seats improved by 0.4 percentage point in the third quarter, helped by the company's reduced fleet capacity.
The "Shape & Size" cost-cutting program yielded a contribution of 70 million euros in the third quarter, while fuel costs increased by 35 million euros, it said.
Although Air Berlin did not detail in its statement how much debt it carried on its books, a key issue for the company, it did say the ratio of shareholder equity to total assets was 8 percent at the end of September - twice as high as the figure only three months earlier. (Reporting By Christiaan Hetzner; editing by John Wallace and Leslie Adler)