Little sign of growth in Germany

There are tough times in Germany where the nation’s two largest carriers have made pessimistic near-term projections.

 

Yesterday (September 20) Lufthansa reversed its forecast that 2011 operating profit would exceed 2010’s – disappointing August sales forced the airline to conclude that “the target of a further increase on the previous year’s figure [€876m] no longer appears achievable”.

 

Some analysts had thought Lufthansa was on course for a €1bn ($1.4bn) operating profit this year.

 

Today (September 21), meanwhile, Air Berlin said it would step up its fleet cull to reduce its aircraft count by 10 per cent by summer 2012, from 170 to 152 aircraft.

 

Air Berlin’s strategy until the announcement had been to cut less than half that number. The airline said the new course was intended to improve earnings by €200m ($280m).

 

New Air Berlin boss Hartmut Mehdorn, who took over from company founder Joachim Mitte in August, wants to return the airline to profit next year; to achieve that, Air Berlin will cut unprofitable routes and pull back from regional airports to concentrate instead on its hubs in Berlin, Düsseldorf, Palma de Mallorca and Vienna.

 

Both Lufthansa and Air Berlin have cited poor passenger traffic in August, though their difficulties are, of course, deeper rooted.

 

Lufthansa shoulders the weight of several unprofitable subsidiary airlines while Air Berlin manages an extraordinarily fragmented business that encompasses a short-haul, low-cost operation, long-haul international flights and a frequent flyer programme – a package aimed at business travellers, private individuals and tour operators.

 

The more immediate concern of disappointing summer traffic has been blamed on Germany’s new passenger tax, introduced at the start of the year.

 

While this may have had some effect, of far great concern to the country’s airlines would be a general tightening of belts by German taxpayers fearful that they will be asked to underwrite eurozone debt.

 

After all, in nearby Vienna, Lufthansa subsidiary Austrian Airlines has just reported record passengers for August.

 

Alex Derber
aderber@ubmaviation.com