Etihad Airways is beginning to see its strategic investment in Air Berlin pay off, after the German carrier reported a net profit of €8.6 million ($11.43m) for Q2, reversing a €38 million loss compared to last year.
The airline, which is Germany’s second largest carrier, also saw revenues rise 3.6% to €1.15bn.
Etihad Airways has a 29.21 percent stake in the airline, which reported a full year loss of €231.9 million in 2013, and has been struggling to reverse years of losses. However, in April this year, Etihad President and CEO James Hogan offered his “full support” to the airline as it announced the start of a restructuring process.
In unveiling the Q2 results, Air Berlin also outlined more details of its restructuring plans. These include the harmonisation of its narrow body fleet, a more focused network which will see capacity reduced by 10 percent, and the shutting down of five crew bases. It will also work towards bilateral cooperation with Alitalia, in which Etihad has a stake of just under 50 percent.
Air Berlin CEO Wolfgang Prock-Schauer said: “We were able to improve the net result and our operating result is looking better than it did a year ago, but this is not sufficient. We are determined to restructure Air Berlin to ensure the airline moves back to a sustainable profitability within three years.
“Over the last few months we have been intensively working on the restructuring program. After diligently weighing and validating all of our options in the past months, we decided that Air Berlin will continue to serve the three core segments, namely Europe, touristic and long haul. We substantially change the way we do business and the way we serve our market.”
Air Berlin said its cost reduction initiatives, launched under the Turbine programme, had also started to bear fruit. The airline managed to reduce costs per available seat kilometre (excluding fuel) by 2.8 percent and improve its yield by 3 percent.
In April, Etihad Airways said will subscribe to a €300 million bond, part of a recapitalisation intended to strengthen and assist in the reorganisation of Air Berlin’s capital structure.
“We’re here for the long term - for the airline, the travelling public and the community. With the right strategic vision, and the right implementation, Etihad Airways believes Air Berlin can become a sustainably profitable business,” Hogan said at the time.