Stock rises 3.8% for Etihad affiliate airberlin

Struggling airline in the midst of restructuring.

Airberlin shares gained altitude yesterday as the airline released its first-half passenger figures.

The stock of the Etihad Airways affiliate was up 3.8 per cent in late afternoon trading.

Airberlin has been buffeted by the economic climate and turbulence in the boardroom as it looked to restructure. Its numbers were closely watched yesterday as an indicator on whether the restructuring was taking effect.

While passenger numbers were up 0.1 per cent in June, its load factor stood at 84 per cent, down 0.9 percentage points, and its passenger kilometres flown was flat year- on-year.

“It’s certainly a sign of encouragement that the airline is pulling in passengers. It has to turn that demand into profit and sustain it,” said Saj Ahmad, the chief analyst at StrategicAero Research.

Etihad, the No 1 shareholder of airberlin with 29 per cent of stock, provided €300 million (Dh1.49 billion) in funding for the carrier in April. Last year airberlin lost €231.9 million, after a profit of €90m in 2012.

“Airberlin has more work to do to achieve acceptable profitability,” said John Strickland, an independent aviation consultant in London with JLS Consulting. “It is in the process of restructuring and redefining its business. This is something which Etihad, as shareholder, is encouraging, and is indeed essential to delivering value on their investment.”

Etihad holds minority stakes in seven airlines: Air Seychelles, airberlin, Virgin Australia, Air Serbia, Aer Lingus, Jet Airways and Switzerland’s Etihad Regional, with Alitalia waiting in the wings. However, establishing a global footprint brings risks.

“Etihad’s investments provide quick inorganic growth and new market access but there are inherent risks if the airlines it has invested in do not prosper or make money,” Mr Ahmad said. “Airberlin has struggled for a while but Etihad has the prowess to turn things around.”

Follow us on Twitter @Ind_Insights

Published: July 7, 2014 04:00 AM


Most Read