With a long-awaited order for 70 Airbus A320 family aircraft now placed, German leisure carrier Air Berlin has outlined its growth strategy for the next decade together with a key partner Niki.
Austria's Niki, founded from the remnants of Aero Lloyd Austria by Niki Lauda in December 2003, operates two A321s and three A320s. Air Berlin's $4.2 billion A320 order has been placed in combination with Niki, with 60 of the firm orders going to the German carrier and Niki obtaining 10. Air Berlin took a 24% stake in Niki in January.
The arrangement between the carriers sees Air Berlin providing several services for Niki, including sales and distribution of its scheduled tickets. "This gives me a very low overhead cost structure and I reduce the Air Berlin cost structure by adding five more aircraft," says Niki Lauda, the ex-Formula One racing driver who heads and flies for his airline.
Together with Niki, Air Berlin will carry nearly 13 million passengers this year, with Niki contributing 960,000, says Air Berlin managing partner Joachim Hunold. This represents a growth of over 30% for Air Berlin. Privately owned Air Berlin does not release detailed financial information, but Hunold says he is expecting a "reasonable" profit for 2004, with revenues for the year exceed €1 billion ($1.3 billion), after making a small loss in 2003. Last year its revenue reached €894 million. Lauda also says his carrier is already flying profitably.
Air Berlin has rapidly expanded its low-fares network in recent years, building from its traditional leisure business. "We have built a solid system in Germany expanded into London and the rest of Europe," says Hunold. Two years ago it launched its City Shuttle branded operation operating from Germany to European capitals. This business has now recouped its start-up investment and is now profitable, he says. Air Berlin also has a hub in Palma de Mallorca, Spain.
The Airbus order is a departure for Air Berlin as it has been an all-Boeing operator to date. The carrier operates 42 737s, largely 700/800s. Initially it will operate a dual fleet with the mix of aircraft depending on the market situation. The aircraft will be delivered from September through to 2011.
The alliance between the carriers is increasing its routes from the UK to Europe, with Niki launching a service between London Stansted and Vienna and Air Berlin operating from Manchester to Berlin Tegel and Düsseldorf. In addition to working with Niki, Air Berlin codeshares with German leisure carrier Hapag Lloyd on certain routes to "optimise our schedule", says Hunold. "We do it as long as it makes sense," he says.
MARK PILLING LONDON
Source: Airline Business
