Air Berlin, Germany’s second-largest airline, has launched a cost-cutting program in response to increased aviation taxes, high fuel prices and reduced demand for North Africa destinations.
CEO Joachim Hunold will not oversee the cost cuts, as he announced his resignation effective Sept. 1.
“I have come to the conclusion that a change of leadership will accelerate our newly launched program,” said Hunold, who has led Air Berlin Group since 1991.
Hunold, who intends to remain as nonexecutive chairman, recommended that board member Hartmut Mehdorn be named interim CEO.
Air Berlin plans to reduce capacity by more than 1 million seats in the second half of 2011, remove eight planes from the fleet, chop unprofitable routes and reduce flight frequencies.
The airline will reduce presence at regional airports and focus on hubs in Berlin and Dusseldorf, plus operations in Vienna and Palma de Mallorca.
Among the unprofitable routes to be canceled are Frankfurt-Hamburg, Frankfurt-Naples, Stuttgart- St. Petersburg, Munich-Cairo and Dusseldorf-Paris.
Hunold claimed that Germany’s aviation tax was 4.1% of Air Berlin’s revenue in the first half of 2011, compared with 1.15% for Lufthansa.
“The aviation tax together with the existing competitive pressure makes it impossible to pass on the increased [fuel] 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 said.
Regarding North Africa service, Air Berlin CFO Ulf Huttmeyer said demand has not recovered in the aftermath of the Arab spring.
In the second quarter, Air Berlin said North Africa capacity (including Egypt, Tunisia and Morocco) was down 25% from the year before, a reduction that cost the airline 20 million euros in revenue.
Before the unrest in Egypt, Air Berlin said it was flying to the country about 80 times per week.