Loss-making Air Berlin is to sell eight planes to improve its deteriorating finances and help cut debt EUR€300 million (USD$370 million) by the year-end.
"The sale is expected to result in a profit. Both the equity ratio and the liquidity position will noticeably benefit from the transaction," Germany's second-biggest airline said on Wednesday.
Air Berlin, which has not posted a full-year operating profit since 2007, has already cut seats, unprofitable routes and postponed aircraft orders to reduce operating costs and shrink its way to profitability after racking up debt to grow rapidly.
Despite that, net debt barely changed in the first half, standing at EUR€812 million at end-June. Loans from Abu Dhabi-based carrier Etihad Airways, which last year bought a 29 percent stake accounted for about EUR€163 million of the debt.
Air Berlin shrank its fleet to 152 aircraft by end-June from 165 a year earlier. According to its website, it owns 26 of its aircraft with the rest leased.
Last week, it reported a wider second-quarter net loss of EUR€66.2 million and said shareholder equity had dropped about two thirds to EUR€101 million by the end of June.
It aims to improve earnings strongly in 2012, helped by EUR€230 million savings from cost-cutting.
The equity ratio - a measure of shareholder equity compared with the overall balance sheet - should be higher at the end of 2012 than the end of last year.
Adding to Air Berlin's woes, passenger numbers fell 5.9 percent in the busy summer travel month of July, as demand fell faster than it could cut capacity.
It has also been hampered by the delayed opening of Berlin's new Brandenburg airport, which should replace Schoenefeld and Tegel airports that date from the cold war.
Gravity always wins!