Air Berlin chief quits after a quarterly loss and plans for drastic network cuts

Germany To Impose Flight Tax
Source: Getty

AIR Berlin founder and chief executive Joachim Hunold quit yesterday after the low-cost carrier posted a quarterly loss and cut its network in the quest for its first annual profit since 2007.

If the board accepts Hunold’s suggestion, Hartmut Mehdorn, the former head of state-owned rail operator Deutsche Bahn, would take over as interim chief executive from 1 September.

Shares in the carrier, Germany’s second-biggest airline after Lufthansa briefly turned positive after the announcement, rising as much as 4.4 per cent, but then dipped.

The debt-laden carrier said it was suffering from a German air travel tax and high fuel costs that it was unable to pass on to customers.

It said it would focus on profitable routes by cutting more than one million seats from capacity, though it does not expect any positive impact on earnings before next year, when it aims to break even. Hunold launched Air Berlin in 1991 and took it public in 2006.

From record levels of over €20 in 2007, the shares slumped to below €4 the following year and have never really recovered.

Air Berlin warned that low-cost carriers would suffer disproportionately from the air travel tax levied in Germany since the start of the year.

At the end of June, Air Berlin’s net debt stood at €616m (£535m).