Europe’s airberlin, the loss-making German carrier part owned by Abu Dhabi’s Etihad Airways, “is facing huge challenges”, newly appointed CEO Wolfgang Prock-Schauer said in a statement on Monday.
Prock-Schauer, former chief of India’s Jet Airways and the UK’s bmi, will immediately succeed Hartmut Mehdorn who had been CEO on an interim basis since September 2011.
“This is the right time for the change in management and it sends the right signal that Wolfgang Prock-Schauer, as the new CEO, is leading the turnaround programme which is so vital for the company. airberlin has already achieved a great deal over the past year,” the outgoing Mehdorn said.
The carrier has not reported a profit since 2007 and while it is aiming to be in the black by 2013, Prock-Schauer admitted it “is facing huge challenges”.
“We must continue to push our process of change forward rapidly to become lean and smart, so that we can be successful in the global competitive environment. Together with my colleagues on the board of directors, the management board and the employees of airberlin we will put all our effort into this task.”
Abu Dhabi carrier Etihad bought a 29 percent stake in the German airline in December 2011 and CEO James Hogan praised Mehdorn’s leadership of the airline.
“In the short period at the helm of airberlin, he has made an enormous contribution to the airline, taking some of the hard decisions that are required to turn around a business, and putting in place the foundations for a successful turnaround and the airline’s sustainable commercial operation,” Hogan said.
Germany’s number two airline after Lufthansa, airberlin is facing a number of challenges, particularly the impact of ongoing delays at Berlin’s new airport.
The Berlin Brandenburg Willy Brandt Airport, which is being built at a cost of €2.5bn (US$3.2bn), has already been delayed twice and the opening has now been pushed back until at least March 2013.
The government-backed airport was to replace Berlin’s three existing airports and was to be the main hub for airberlin.
The delayed opening has heaped further costs on the unprofitable carrier, which in September posted losses for the first three months of 2012 widen to €66.2m (US$81.8m), compared with a year-earlier loss of €43.9m.
Jürgen Pieper, an analyst at private bank Metzler, estimated the delays were costing airberlin around US$6m a month, magazine Der Spiegel reported.
Mehdorn told Arabian Business in a September interview the carrier was in talks with airport officials and was considering its options.
“We are in talks with the Berlin Brandenburg Airport. We think they have to reimburse… if they don’t do this we go to court.”
Despite the carrier’s equity plummeting by about two-thirds to €101.3m by the end of June 2012 and its losses rising, Mehdorn was still confident the carrier would return to the black by the end of 2013.
“We are still saying [that] in the year 2013 we will be back to profit and then we will have to see how we develop in the future,” he said.
Regardless of these challenges, Etihad said last month it had already recouped its initial US$105m investment in the carrier.
In December Etihad bought a 70 percent stake in airberlin’s frequent-flyer programme as the latter seeks to cut costs and pay down its debt.
The deal, airberlin said, to carve out the ‘topbonus’ scheme would generate revenue of €184.4m (US$242.70m).
Etihad and airberlin also said that the year-old alliance has delivered more than 300,000 passengers onto each other’s networks.
The companies added they have also begun implementing a detailed procurement strategy to bring multi-million dollar savings for both airlines.
Airberlin and Etihad Airways announced in the year that the airlines would integrate their Boeing 787 Dreamliner programmes.
The move, which involves 56 aircraft, will save millions of dollars for both carriers which together represent the largest single order for the Boeing 787.
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