Shareholders enthusiastic about rumoured airberlin split
Airberlin shares have been lifted by reports that management is considering splitting the airline.
The stock of the Etihad Airways affiliate rose as high as 4.6 per cent after the German magazine Focus reported that the carrier could be divided into two entities.
The first would offer standard scheduled flights and the second would fly to tourist destinations.
“Airberlin has to address its substantial losses, having grown and attempted to be almost all things to all people,” said John Strickland, the director of London-based JLS Consulting.
“Whether a straight split is the answer remains to be seen, but the business model has to be simplified and more clearly defined if a secure future and financial success is to be found,” Mr Strickland said.
An airberlin spokesman said the airline would not “comment on rumours”. Etihad declined to comment.
Jonathan Wober, the chief financial analyst at the Capa Centre for Aviation said: “If there is any sign that it [the split] might improve airberlin’s focus and give greater visibility to the different performance of different divisions, possibly even leading to divestment at some stage, then that could explain a positive reaction in the shares”.
Airberlin, which is 29.2 per cent owned by Etihad, reported a loss of €231.9 million (Dh1.18 billion) last year, after making a profit of €90m in 2012. Earnings were affected by a slow outbound summer season combined with tough competition in its domestic market and a weak European economy.
Airberlin said last month that it would implement structural changes to its business. It has also appointed a chief restructuring officer for the job.
Johannes Braun, a financial analyst at Germany-based Commerzbank, remains sceptical about the performance of airberlin. He said that it was difficult to separate airberlin’s two businesses, as passengers for scheduled and charter flights use the same fleet of aircraft.
“It could be potentially realised by renting out seats between both of such new entities, but a clear cut of revenues and especially profits would be difficult,” said Mr Braun.
“Even more importantly, we doubt that just separating both customer streams would resolve any of the fundamental problems of airberlin.”
Follow us on Twitter @Ind_Insights