LAXintl
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Air Berlin - More Job Cuts; Restructuring Slowed

Tue Mar 26, 2013 6:34 pm

Air Berlin continues to see ever more adjustments.

Company has announced another round of 900 employee cuts as part of its "Turbine 2014" turnaround program.
Company will now also seek to realign the entire group organization also. The fleet will be trimmed by 12 aircraft in 2013 ending the year with 142. 15 aircraft were removed in 2012.

The continued global economic turmoil along with continued high fuel prices have slowed the restructuring plan "the path to sustainable profitability is longer than expected."

One major objective this year for the company is to reduce its debt load, for which it is working closely with Etihad on.

Stories
http://www.nasdaq.com/article/air-be...-jobs-20130320-00480#ixzz2OfiLWY9d
and
http://www.bloomberg.com/news/2013-0...moil-hampers-turnaround-plans.html

=
From the desert to the sea, to all of Southern California
 
mercure1
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Wed Mar 27, 2013 2:29 pm

I have yet to hear of a coherent strategic plan for what Air Berlin will become after all this restructuring. Will it become a network hub carrier, a hybrid LCC, still a charter airline ???

Seems all they are doing is very much cutting without much speaking of where Air Berlin will sit in market placement when all said and done.
 
LAXintl
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Thu Mar 28, 2013 5:01 am

Good point - what is AB's niche ?

This seems to be an enduring question and likely part of its problem as it tries to be many different types of airlines all at once.
From the desert to the sea, to all of Southern California
 
captaincrackers
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Thu Mar 28, 2013 8:52 am

Quoting mercure1 (Reply 1):
I have yet to hear of a coherent strategic plan for what Air Berlin will become after all this restructuring. Will it become a network hub carrier, a hybrid LCC, still a charter airline ???

It'll continue to be all three! That's the strategic plan!
 
captaincrackers
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Thu Mar 28, 2013 8:58 am

Quoting LAXintl (Thread starter):
Company has announced another round of 900 employee cuts as part of its "Turbine 2014" turnaround program.

I'm pretty sure that it's still Turbine 2013 and that those 900 job cuts are the same 900 that were announced late 2012. As far as I can tell, only 150 or so jobs have been cut so far, and the remaining number will go over the course of the year.

[Edited 2013-03-28 01:59:17]
 
mercure1
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Thu Mar 28, 2013 2:50 pm

Quoting CaptainCrackers (Reply 3):
It'll continue to be all three! That's the strategic plan!

Kinda crazy to keep sticking to so many differing activities

AB needs to pick what they will become and focus on such track.

For example -
- network/hub carrier aligned well to mesh with OW and Etihad
- European hybrid LCC
- Medium/longhaul beach/leisure carrier
- Charter /tour operator

It seems each one of these has contradictory needs. From marketing, product, service and even fleet needs.

I think trying to be all is guarantee for continued failure I see.

Consumer will be confused what AB is about.
 
LAXintl
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Thu Mar 28, 2013 8:51 pm

Yes certainly I think there is indeed good deal of confusion as to what AB is in the eyes of the consumer and its market placement.

For one person they might be the charter holiday airline taking them to a beach destination far away, to another a low fare means to get around Europe, and to another a business carrier to get around inside Germany in association with OneWorld partners.

Clearly having ones feet in so many different areas complicates the operation and creates product perception issues in trying to define an enterprise in the eyes of the traveler.
From the desert to the sea, to all of Southern California
 
LOWS
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Thu Mar 28, 2013 9:00 pm

Quoting mercure1 (Reply 5):
Consumer will be confused what AB is about.

Today in Salzburg I saw:

1. An advertisement for Air Berlin's new business class seat.
2. An advertisement for a flight/ package tour to Hurghada...operated by....Air Berlin.

Hell, I'm confused.
 
IndianicWorld
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Fri Mar 29, 2013 5:22 am

Quoting LOWS (Reply 7):
Hell, I'm confused.

Thats certainly the problem with any carrier that tries to be all things to all people. This New World Carrier tag that Virgin Blue (now Virgin Australia) and AB have seemingly used in the past really starts to make less and less sense, given the lack of clear market positioning.

In the end Virgin Blue evolved to chase higher yields and I would suspect that AB will either have to create a dual branded strategy or move to one end of the market.
 
mercure1
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Fri Mar 29, 2013 8:26 pm

So what path should Air Berlin emulate?

Seems with Etihad investment, and oneworld membership, the path to becoming a true mainline carrier rivaling Lufthansa in Germany seems more sensible focus.

Either way, I think it should focus on single market strategy and move away from confused place of being many airline models in one.
 
LAXintl
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Sat Mar 30, 2013 5:00 pm

Whatever Air Berlin does I think it will face challenges.

However with Etihad footing much of the money, it seems they will have a big say, and running a traditional hub focused airline operation probably meshes better with Etihad's own ambitions.

So in the long run I would think the shorthaul LCC concept along with leisure tour operator models will need to change at AB.
From the desert to the sea, to all of Southern California
 
BestWestern
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Sun Mar 31, 2013 12:11 pm

Carriers, like Aer Lingus, manage to operate a quality long haul product alongside a lower cost single cabin high density short haul product.

It's all about developing a product that is relevant to the customer base, and perceived to be good value.
You are 100 times more likely to catch a cold on a flight than an average person!
 
r2rho
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Mon Apr 01, 2013 12:23 pm

Quoting mercure1 (Reply 1):
I have yet to hear of a coherent strategic plan for what Air Berlin will become after all this restructuring. Will it become a network hub carrier, a hybrid LCC, still a charter airline ???

Indeed, AB seems to only be cutting to the bone without any sort of long-term plan of what they want to be when the cuts are over. Kinda similar to the "restructuring" happening at IB too.

Quoting mercure1 (Reply 5):
It seems each one of these has contradictory needs. From marketing, product, service and even fleet needs.
I think trying to be all is guarantee for continued failure I see.
Consumer will be confused what AB is about.

Crazy idea, but why not resurrect the old LTU brand? AB could keep it all but without the confusion: AB as a quality network carrier, while offloading all the sun&beach operations to a new lower-cost-base LTU. Two products within the same airline group with full codesharing etc, like LH-4U or IB-VY.
 
reifel
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Mon Apr 01, 2013 12:33 pm

What is interesting though, is that what we all so as no strategy since years, other carriers start to do it now:
i.e. LH goes More and more Low Cost with Germanwings, they also started to make full charters to tour operators on weekend (i.e. Palma, Ibiza, Antalya), plus they also serve more and more holiday destinations (i.e. Bastia, Palma here as well etc).

I believe what defintely is a misperception is that AB is an LCC. They are part of an alliance, uses hubs, available through all major GDSs, bookable through resellers, have catering etc. It has been years I don't see why they should been considered as an LCC, as they offer more than quite a lot of other european airlines (especially southern: Italy and Spain, a market which they are quite active in).
 
LAXintl
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Mon Apr 01, 2013 4:33 pm

Quoting reifel (Reply 13):
I believe what defintely is a misperception is that AB is an LCC. They are part of an alliance, uses hubs, available through all major GDSs, bookable through resellers, have catering etc. It has been years I don't see why they should been considered as an LCC, as they offer more than quite a lot of other european airlines (especially southern: Italy and Spain, a market which they are quite active in).

AB itself is to blame imo for this confusion.

AB has evolved basically into a high-end (with higher cost base) LCC. They still earn revenues and try to position themselves as the LCC option often against folks like LH, but they have cost inefficienty of all the things you mention like hubs, catering, GDS, mixed fleet, products, etc.

Its almost the worst of two worlds. Earn meager revenues, with high cost base.

Then add in the further operational complexities of trying to be a sun/beach tour operator, and then also a longhaul value player left over from LTU you can see why the market has a misperception of AB.

For OW yes they are a member, but they are not a traditional hub focused airline with broad network connection option for alliance passengers, nor offer traditional high end product offerings like own airport lounges(except DUS). Then add in the Etihad partnership whose direction is far from clear still.

So at the end, the AB brand is stuck in 2, 3, maybe 4 different worlds in the eyes of the consumer.
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mercure1
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Mon Apr 01, 2013 6:43 pm

Quoting reifel (Reply 13):
i.e. LH goes More and more Low Cost with Germanwings, they also started to make full charters to tour operators on weekend (i.e. Palma, Ibiza, Antalya), plus they also serve more and more holiday destinations (i.e. Bastia, Palma here as well etc).

Not problem for Lufthansa as everyone knows what Lufthansa is. Also LH Group has many clearly segmented brands.

Problem is Air Berlin is trying to do everything under one brand name. Gone is LTU which I think many understood as charter and longhaul leisure airline, and also soon will essentially be gone completely FlyNiki as well.

Everyone left with this confused situation of Air Berlin trying to be so many different things under one label.
 
r2rho
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Tue Apr 02, 2013 3:12 pm

Quoting reifel (Reply 13):
I believe what defintely is a misperception is that AB is an LCC.

I have always said that their LCC origins are definitely hurting their brand image. At least in Y, AB service is on par or better than any other legacy in th EU. However, AB is not preceived as a full-service carrier by the public, therfore they are unable to charge a premium for their service. Heck, I've even seen some supposedly knowledgeable aviation media still classify AB under the LCC segment, which they left some time ago.

Quoting LAXintl (Reply 14):
Its almost the worst of two worlds. Earn meager revenues, with high cost base.

  
 
SCQ83
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Tue Apr 02, 2013 3:48 pm

Quoting LAXintl (Reply 14):
So at the end, the AB brand is stuck in 2, 3, maybe 4 different worlds in the eyes of the consumer.

I was reading the other day in a Spanish newspaper that they want to increase their business traffic share in Spain-Germany with the new MAD-TXL route... hello? Which kind of business traffic there is between Berlin and Madrid today (I doubt it is growing).... who would fly Germany-Spain for business other than LH (and even IB) to connect in TXL with AB of all places and companies? And now they closed their Spanish domestic routes from PMI but they started codesharing with YW.

They remind me of Air Europa... they would open a "charter" route to the Caribbean today, and tomorrow a "business" route to GVA or BRU... completely schizophrenic. And ironically, if you want to fly to Berlin from major places in Europe... and they don't even fly there... I lived in BRU for a while and when I tried visiting friends in Berlin I discovered with surprise they don't serve BRU-BER (so everything is for Brussels/Lufthansa and Easyjet). And the same for other major cities like AMS. And that from their major hub (with permission of DUS) for which they are get their name... and again I am talking about Brussels and Amsterdam (!).

I personally think they should have taken the Vueling approach. Berlin is not a powerhouse in Germany, but still it is the capital, a growing destination and "trendy" (like Barcelona is). It is (or was) also somehow misregarded by LH. It has a great location for Eastern Europe. They could have expanded to connect Eastern Europe/Russia/Scandinavia to Western/Southern Europe (look at VY now with +100 destinations from BCN!)... for instance the traffic that wants to go from Nizhny Novgorod to Alicante or Goteborg to Nice. They could have a distinctive advantage there compared to LH, and being Berlin a destination by itself in Europe.

I wonder why they even fly long-haul.
 
sofianec
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Tue Apr 02, 2013 3:59 pm

Quoting SCQ83 (Reply 17):
who would fly Germany-Spain for business other than LH (and even IB) to connect in TXL with AB of all places and companies?

I would assume many people would. Lufthansa is actually too expensive on many routes. For example between SOF and FRA or MUC they are 2 1/2 times more expensive than FB and that is always. They do have the frequencies but many companies are cutting and demanding to fly the cheapest option. AB have made their calculations and see demand for MAD-TXL. They need to start making Berlin a true hub for themselves now rather than later.

A network of business destinations out of BER is a MUST for AB it's their hub after all. BER is an excellent X point for flights from East (Russia), even though geographically not optimal, traditionally and logically positioned to attract a decent traffic + growing O/D.

---

[Edited 2013-04-02 09:05:29]
A350WARP
 
mercure1
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Tue Apr 02, 2013 5:00 pm

I think one of the problems with AB arise from all the mergers it took to get to where AB is today.

We have the original USA owned Air Berlin, then we have Deutsche BA, Germania, LTU, Niki, plus partnerships with TUIfly and it the foreign owners ESAS (Pegasus Airlines in Turkey) and Etihad.

Each merger brought its own business model, planes, people, bases etc. Lots of excess baggage.

Also the name -- why Berlin? Its largest operation still remains Dusseldorf, and they have flight bases in 10 other German cities also. I think they should have a more generic name, unless if they indeed will close everything and really only focus on a true Berlin home.

AB is like goulash - everything mixed together without clarity as to ingredients(the product and business plan).
 
SCQ83
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Tue Apr 02, 2013 5:05 pm

Quoting mercure1 (Reply 15):
Everyone left with this confused situation of Air Berlin trying to be so many different things under one label.

I don't think the problem is to do many things with one label... the problem is that they try to do many things without being that big and without standing out in anything first. For instance, BA carries business travellers from LHR to JFK and leisure travellers from LGW to MCO.

Quoting mercure1 (Reply 19):
Also the name -- why Berlin? Its largest operation still remains Dusseldorf, and they have flight bases in 10 other German cities also. I think they should have a more generic name, unless if they indeed will close everything and really only focus on a true Berlin home.

I agree that Air Berlin can be a bit misleading name, but it is probably the least of their problems. Look at Norwegian and their European expansion (i.e. LGW or ALC bases).
 
r2rho
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RE: Air Berlin - More Job Cuts; Restructuring Slowed

Wed Apr 03, 2013 11:38 am

Quoting sofianec (Reply 18):
They need to start making Berlin a true hub for themselves now rather than later.

Problem is, they can't. Not until the new BER opens, and noone knows when that will happen. 2014? 2015? Not even the airport responsibles know. Should AB keep burning cash until it opens at a TBD date? I would not base my business plan on that.
Instead, AB should resort to a plan B and concentrate around DUS and VIE, with a secondary focus on STR and HAM, forgetting about BER for the time being. They can always reconsider when the new airport opens, but they should try to make money today, and money can be made out of DUS and VIE IMO.