Air Berlin to reduce fleet, slash routes in major shake-up

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Air Berlin is to implement a wide-ranging cost reduction plan that will see it cut eight aircraft from its fleet, cancel a number of routes and partially withdraw from regional airports, in a bid to return to profitability.

The carrier will reduce its fleet by eight aircraft as it slashes capacity by more than 1 million seats in the second half of 2011. Air Berlin could not immediately be reached to comment on which type of aircraft will be included in the reduction.

Under the 'Shape and Size' programme, Air Berlin will axe flights from Frankfurt to Hamburg and Naples, from Stuttgart to St Petersburg, from Munich to Cairo and from Dusseldorf to Paris.

It is also dramatically cutting services from regional airports, which it said have become a "casualty" of the new German aviation tax. Flights from Munster/Osnabruck to London Stansted, Vienna and Sylt will be scrapped, as will flights from Cologne-Bonn to Valencia and various Moroccan destinations. Cologne to Innsbruck, Naples and Palermo will no longer be available in the winter months, nor will Hanover-London.

From November, there will be no direct winter flights from Karlsruhe, Dresden or Basel to Palma. Flights to London and Manchester from Paderborn will end, and air Berlin will completely end its presence at Erfurt.

"In order to become profitable, we need to make cuts in our flight routes and in our fleet," said Air Berlin chief executive Joachim Hunold.

Air Berlin saw its second-quarter operating loss widen to €32.2 million ($46.1 million). The carrier took a €20 million hit from the effects of civil unrest in North Africa, while it paid an extra €71 million for fuel in the second quarter. But it has saved its most scathing words for the new German aviation tax, which cost the carrier €45 million in the second quarter.

"The aviation tax is causing a dramatic distortion of competition. In relation to revenue, we have to pay almost four times as much as our largest competitor," said Hunold.

"The aviation tax, together with the existing competitive pressure, makes it impossible to pass on the increased kerosene price to the customers in its entirety. In order to prevent yet further damage to the already low-margin airline traffic in Germany, the aviation tax should be abolished as quickly as possible."

Hunold added that the planned cost reduction measures "will possibly not suffice to obtain a positive operating result at the end of the year".