Air Berlin, Germany’s second-largest airline, presented a frightening set of results on Friday, reporting a net loss of €782 million ($854 million) in 2016, up from €447 million in 2015. There was no let-up in the first quarter of 2017, when its net loss grew to €293.3 million from €182.3 million in the year-earlier period.
The numbers were expected to be bad but investors were still shocked. The impact of the airline’s restructuring on its everyday operations has been evident since last fall, with flight cancellations, a shortage of planes and crews and a slowdown in ticket sales. Air Berlin, which has made a net loss in every year but one since 2008, is 29 percent owned by Abu Dhabi carrier Etihad, and is undergoing a revamp that will halve the size of its fleet to around 75 planes.
“The unclear market position, the highly seasonal route network and the high operating costs of the old Air Berlin have led to these highly unsatisfactory financial results,“ said Thomas Winkelmann, who took over as chief executive in February. The results were made worse by Mr. Winkelmann’s decision to order a thorough clean-up of Air Berlin’s balance sheet.
But many skeletons in Air Berlin’s closet have been left by a string of transactions undertaken by long-serving Chief Financial Officer Ulf Hüttmeyer to obtain fresh funding. Those deals resulted in costs, albeit with a delay, in addition to €335 million in restructuring costs.