The story
1978–1990: American charter airline in West Berlin
Originally registered as Air Berlin USA, the company was founded in 1978 as a wholly owned subsidiary of Lelco, an American agricultural enterprise headquartered in Oregon, to operate charter flights on behalf of German tour operators from Berlin Tegel Airport, mostly to Mediterranean holiday resorts.
The co-founders of Air Berlin USA were:
Kim Lundgren, a former Berlin-based flight engineer of Pan American World Airways;
John MacDonald, a former station manager of United States supplemental air carrier Saturn Airways at Berlin Tempelhof Airport in the 1960s and subsequent general manager Europe and vice president at the Berlin Tegel Airport base of the former United States supplemental carrier and charter airline Modern Air from 1968 until 1974;
Mort Beyer, Modern Air's executive vice president from 1967 until 1971 as well as the airline's president and vice president of the National Air Carrier Association in 1971 and founder of United States aviation consultancy Avmark.
Lelco was the agriculture business of Kim Lundgren's family in the United States.
As a United States airline, Air Berlin was able to access the West Berlin airline market. During the Cold War, Berlin's special political status meant that the air corridors into and out of Tegel Airport could only be used by airlines registered in France, the United Kingdom or the United States. The airline's headquarters were initially at Tegel Airport. Leonard Lundgren was the first chairman.
After the company was issued an airline licence and acquired two Boeing 707 jet airliners previously owned by Trans World Airlines, Air Berlin USA commenced revenue services on 28 April 1979 with a flight from Berlin-Tegel to Palma de Mallorca. Plans were made to start long-haul flights on West Berlin-Brussels-Florida routes, in cooperation with Air Florida (an agreement to that effect had been signed in February 1979).
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In 1980, two Boeing 737-200s were leased from Air Florida. In 1981, Air Berlin USA continued its weekly scheduled Boeing 707 service on the Berlin Tegel Airport - Brussels - Orlando route; however, by 1982, the 707s had been phased out, and during most of the 1980s, Air Berlin USA operated only a single 737-200 or (from 1986) a 737-300. In 1990 and 1991, two Boeing 737-400s were also placed into service.
1990–2000: New investors and expansion
German reunification led to significant changes to the European aviation market, and in particular in Berlin: German airlines now gained access to the city. In 1991, Air Berlin (which had 90 employees at the time) was restructured as Air Berlin GmbH & Co. Luftverkehrs KG, a German-registered company, with several German investors joining Kim Lundgren, the original founder, thereby bringing the ownership in line with German foreign-control requirements. Joachim Hunold (de), a former sales and marketing director with LTU International, now led the company.
Following an order for ten Boeing 737-800s, Air Berlin grew and by 1999, the fleet grew to twelve aircraft. In 2001, Air Berlin and Hapag-Lloyd Flug became the first airlines in the world to have their Boeing 737-800s fitted with blended winglets, wingtip devices that are intended to improve fuel efficiency.
Air Berlin introduced scheduled flights (which could be booked directly with the airline rather than via a tour operator) in 1997, initially linking a number of secondary German airports to Mallorca. By 2002, 35 percent of Air Berlin's tickets were sold directly. In the same year, the airline expanded beyond holiday destinations as low-fare flights marketed as "City Shuttle" to London, Barcelona, Milan and Vienna started. Besides Berlin-Tegel, these routes were opened at six German airports (Dortmund, Düsseldorf, Hamburg, Münster/Osnabrück, Nuremberg, and Paderborn/Lippstadt) that until then had not been served by one of the rising European low-cost carriers. In what later became a hallmark for Air Berlin as a "semi-low cost carrier", the airline offered complimentary meals and seat reservations, in contrast to its competitors Buzz, Hapag-Lloyd Express, Ryanair and Virgin Express.
2000–2006: Becoming Germany's second-largest airline
In November 2001, the delivery flight of a Boeing 737-800 fitted with winglets set a record: the aircraft with the registration code D-ABBC flew 8,345 kilometres non-stop from Seattle (Boeing Field), USA to Berlin (TXL), Germany in 9 hours, 10 minutes.
In January 2004, Air Berlin announced it would cooperate with Niki, a Vienna-based airline. As part of the deal, Air Berlin took a 24% stake in Niki.
In 2005, the Group reorganised its corporate structure. It established Air Berlin plc (registered in England) into which it reversed Air Berlin GmbH & Co. Luftverkehrs KG and subsidiaries. It was suggested that the reason for the group to establish a UK-based PLC instead of a German-based AG was to avoid the need to have a supervisory board and employee representation as required by the German law of Mitbestimmung or co-determination.
In 2006, Air Berlin went public on the Frankfurt Stock Exchange. Originally scheduled for 5 May 2006, the IPO was postponed to 11 May 2006. The company said the delay was due to rises in fuel costs and other market pressures limiting investor demand. It reduced the initial share-price range from 15.0 to 17.5 euros to 11.5–14.5 euros. The stock opened at €12.0, selling a total of 42.5 million shares. Of these, 19.6 million were new shares increasing capital in the company, and the remainder to repay loans extended by the original shareholders and invested in the company earlier in 2006. After the IPO, the company claimed to have over 400 million euros in cash to fund further expansion, including aircraft purchases.
In August 2006, Air Berlin acquired German domestic airline dba. Flight operations at dba were continued as a fully owned subsidiary of Air Berlin until 14 November 2008, when the dba brand was discontinued due to staff strikes (dba staff were subsequently offered positions with Air Berlin).
On 28 November 2006, Air Berlin ordered 60 Boeing 737-800 aircraft, and 15 smaller Boeing 737-700 aircraft. The value of the 75 aircraft was 5.1 billion US dollars (based on list prices at the time.) Delivery of the aircraft started in 2007. All of these aircraft were equipped with blended winglets, to improve fuel efficiency.
2007–2012: Takeovers, expansion and new alliances
In March 2007, Air Berlin took over German leisure airline LTU, gaining access to the long-haul market and becoming the fourth-largest airline group in Europe in terms of passenger traffic. This deal led to the introduction of Airbus A321 and Airbus A330 aircraft into Air Berlin's fleet. On 1 May 2009, the LTU brand was discontinued.
On 7 July 2007, Air Berlin announced an order for 25 Boeing 787-8 Dreamliner long-haul aircraft, with further options and purchase rights. Three additional aircraft of this type were to be leased from International Lease Finance Corporation.
On 21 August 2007, Air Berlin acquired a 49 percent shareholding in Swiss charter airline Belair, the remainder being owned by tour operator Hotelplan. Following the deal, Belair's long-haul business was terminated, and the fleet was replaced by Airbus A320 family aircraft operating scheduled flights on behalf of Air Berlin as well as charter flights for Hotelplan. On 20 September 2007, Air Berlin announced it intended to buy its competitor Condor in a deal that envisaged Condor's owner, Thomas Cook Group, taking a 30% stake in Air Berlin. However, the rapidly increasing price of jet fuel and other considerations led to the abandonment of the deal in July 2008.
In January 2008 Air Berlin introduced a new logo and corporate design. The logo is a white oval shape on a red background (suggesting an aircraft window) where the letter "a" is a white circle and two white stylised wings. The text "Air Berlin" was in lower case and written as one word. Sometimes the slogan "Your Airline" was featured as part of the logo. In June 2008, CEO Joachim Hunold offended Catalan language speakers, when he claimed in an article included in Air Berlin's in-flight magazine that the government of the Balearic Islands was trying to impose the use of Catalan on Air Berlin flights from and to Mallorca. He claimed that Air Berlin was an international airline and was not obliged to use Catalan. Hunold went on to criticise the language policy in Catalonia and the Balearic Islands, claiming that at the time many children could not speak any Spanish. The Balearic Islands' president, Francesc Antich, explained that his government had simply sent a letter to encourage airlines operating in the Balearic Islands to include Catalan among the languages used for onboard announcements.
On 18 June of the same year, Air Berlin announced that it would reduce its long-haul services by 13 percent and its domestic services by 10 percent to increase profitability. In September 2008, Air Berlin confirmed merger talks with competitor TUIfly, but added it was speaking with all parties. Air Berlin had, until 2007, been flying many code-share TUI flights. At the end of March 2009, Air Berlin PLC and TUI Travel PLC signed a deal by which their German flight businesses were to operate a long-term strategic alliance. Originally, each company was to take a 19.9% stake in the other and the German cartel authorities were petitioned for approval. After the Bundeskartellamt expressed concerns, the cross-ownership plan was not implemented. Instead, TUI Travel PLC purchased a 9.9% stake in Air Berlin PLC using a capital increase at a subsidiary to do so.
At the end of March 2009, a strategic partnership agreement with TUI Travel was signed, with Air Berlin and its competitor TUIfly purchasing 19.9 percent of the other's shares. Following the deal, Air Berlin took over all German domestic TUIfly routes, as well as those to Italy, Croatia and Austria. Also, all of Tuifly's Boeing 737-700 aircraft were added to Air Berlin's fleet. TUIfly was to abandon all scheduled flights and rely exclusively on the charter business.
In March 2009, ESAS Holding A.S., a Turkish company, bought approximately 15 per cent of the voting shares in Air Berlin. Also in 2009, Air Berlin added Hartmut Mehdorn to the board of directors after his retirement at Deutsche Bahn.
In April 2010 Air Berlin expanded its codeshare arrangements with Russia's S7 Airlines. Air Berlin and S7 Airlines had cooperated since October 2008. New services included codeshare flights via Moscow to Irkutsk, Perm and Rostov.
In July 2010, Air Berlin announced an increase in its shareholding in the Austrian airline Niki. Air Berlin indirectly acquired 25.9% of the shares in Niki from Privatstiftung Lauda (private Lauda foundation) and in doing so increased its shareholding in Niki from 24% to 49.9%. In connection with the increase of its shareholding, Air Berlin was to grant the private Lauda foundation a 40.5 million-euro loan. The private foundation had the options to repay the loan in three years with cash or through the transfer of the remaining 50.1% of Niki's shares.
In July 2010, it was also announced that Air Berlin would join Oneworld, the global airline alliance. In preparation for joining the alliance, Air Berlin made codeshare agreements with Finnair and American Airlines starting with the 2010/2011 winter schedule. Air Berlin planned to operate an airline hub at Berlin Brandenburg Airport together with its Oneworld partners from the originally planned opening in 2012. The delayed opening of the new airport made it difficult to operate a hub, as the infrastructure at Tegel was not designed for a hub.
Air Berlin founded Follow Me Entertainment GmbH in September 2010 as a joint venture with kick-media ag. This joint-venture company markets image and sound media, books, games as well as events, concerts, tournaments and sponsoring.
On 1 April 2011 Air Berlin completed the integration of LTU. All Air Berlin Group technical services were consolidated in a new company called airberlin technik GmbH. It also added new routes, more frequent flights and additional long-haul flights from Düsseldorf. On 15 June 2011, Air Berlin and British Airways reached a codeshare agreement covering some flights within Europe, starting from 5 July 2011. The agreement applied to flights to over forty European destinations served by the two airlines. CEO Joachim Hunold resigned from his position on 1 September 2011 and was succeeded by the former CEO of Deutsche Bahn AG, Hartmut Mehdorn, who led the company on an interim basis until January 2013.
In November 2011 Air Berlin and Pegasus Airlines (Turkey's largest private airline) launched Air Berlin Turkey, aiming at the charter market between Germany and Turkey. Pegasus Airlines is 16.5% owned by ESAS Holding AS. In the third quarter of 2011, the turnover of the company amounted to 1.4 billion euros, an increase of 11%. However, operating profit decreased by almost 50% to around 97 million euros. As a result, a new bond to raise additional capital was issued. In November 2011 Air Berlin took over the remaining 50.1% stake in NIKI as repayment of a loan and became its sole owner. The brand name was retained and Niki Lauda was given a position on the board of Air Berlin.
Air Berlin announced on 19 December 2011 that Etihad Airways had increased its share of Air Berlin from 2.99% to 29.1%, for a sum of 73 million euros, making Etihad the company's largest shareholder. The deal supplied more cash to Air Berlin, and provided Etihad access to Air Berlin's European network.
2012–2015: Restructuring amid continuing losses
The cooperation of the frequent-flyer programs topbonus and Etihad Guest was announced in March 2012. In June 2012, the collaboration concluded with the bonus programs airberlin business points and Etihad Airways Business Connect for SMBs.
On 20 March 2012, the entry into Oneworld was officially completed. The Oneworld network offered over 800 destinations in 150 countries. At the same time, the airline introduced the Platinum status for its frequent-flyer program topbonus. In May 2012 Air Berlin presented its new fare structure "Your Fare" including "Just Fly", "Fly Classic" and "FlyFlex" for flights from 1 July 2012. On 11 May 2012 Air Berlin opened its triweekly non-stop flight from Berlin to Los Angeles in the summer schedule, a destination which until then had only been served from Düsseldorf. On 18 December 2012 Air Berlin announced that topbonus, its frequent flyer program, would be sold to Etihad Airways; only a 30-percent minority share would be retained. Air Berlin also announced the expansion of the existing codeshare agreement with Etihad Airways on 20 December 2012.
In January 2013, the first Airbus A330-200 was introduced with a new business class which enabled a fully flat position for the first time. On 7 January 2013 Air Berlin appointed Austrian Wolfgang Prock-Schauer, former Chief Strategy and Planning Officer, as the company's CEO, replacing Hartmut Mehdorn.
Air Berlin started flights between Berlin and Chicago on 23 March 2013. It cancelled the seasonal non-stop flights to Las Vegas, San Francisco and Vancouver. In March 2013 Air Berlin announced the closure of its seasonal hub for leisure destinations at Nuremberg Airport. Only ten year-round direct routes remained.
On 24 September 2014, Air Berlin cancelled the remaining 15 orders for their Boeing 787s as well as 18 remaining orders for Boeing 737-800s as part of their restructuring programme. In October 2014, the Luftfahrt-Bundesamt denied Air Berlin authorization to operate 34 routes as a codeshare with co-owner Etihad from the 2014/2015 winter schedule as they would contravene the bilateral traffic rights between Germany and the UAE.
Also in October 2014, Air Berlin announced the termination of flights to Palma de Mallorca from both Bremen Airport and Dortmund Airport, therefore withdrawing entirely from these two German airports.
Air Berlin announced a net loss for 2014 of €376m (€316m loss in 2013). The airline's revenues in 2014 stagnated at €4.16 billion.
In September 2015, Air Berlin phased out the last Boeing 737-700s owned by the company. The remaining aircraft of this type would operate on a wet lease basis from TUIfly until 2019. All Boeing 737-800s were to be phased out by 2016 as Air Berlin plans to focus their short- and medium-haul fleet on the Airbus A320 family to cut costs. In November 2015, Air Berlin announced the closure of its Palma de Mallorca Airport hub by ceasing all of the hub's seven Spanish domestic routes by 3 April 2016. Some days earlier, the airline announced plans to add flights from Düsseldorf to Boston, Dallas/Fort Worth, San Francisco and Havana by spring 2016. However, the planned route to Dallas/Fort Worth was cancelled a few weeks later due to low demand. On 30 December 2015, the administrative court in Braunschweig ruled in favour of the German civil aviation authority (the Luftfahrt-Bundesamt) and against Air Berlin regarding some of their codeshare operations with Etihad Airways. The shared sale and advertising of 31 out of 83 routes which were marketed by both were declared illegal and ordered stopped by 15 January 2016 as they were not covered by the bilateral air-traffic agreement between Germany and the UAE. The Luftfahrt-Bundesamt had allowed these flights until a definite legal ruling was made.
2016–2017: Restructuring efforts
In April 2016, Air Berlin announced a record loss of €446 million for 2015; the airline's revenues had decreased to €4.08 billion. Amongst the reasons considered for Air Berlin's poor performance were: crippling debt of over €800m; unclear and rapid strategy changes on routes and advertising; several CEOs over recent years; a five-year-plus delay to the new hub Berlin Brandenburg Airport; failed negotiations to profit from lower fuel prices and the overall harsh competition in the airline industry. In July 2016, Air Berlin confirmed that it no longer owned any of the aircraft it operates, having sold and leased back the last of the aircraft it had previously owned. A few weeks later it was reported that Air Berlin and Etihad Airways were in talks with Lufthansa regarding the latter's acquisition of some of Air Berlin's routes outside of the Berlin and Düsseldorf hubs as well as some staff and aircraft leases. Also in July 2016, Air Berlin announced the increase of flights to the United States from 55 to 78 nonstops per week for 2017. Besides some frequency increases, Los Angeles and San Francisco were to be served from Berlin as well as by the then existing Düsseldorf routes. And a new Düsseldorf-Orlando route was announced. A few days later, the airline announced the introduction of a business class on its short- and medium-haul flights.
In December 2016, Air Berlin announced Stefan Pichler's departure after serving two years as CEO and replacement by former head of Germanwings, Thomas Winkelmann on 1 February.
The "new Air Berlin" project
On 28 September 2016, Air Berlin announced The new airberlin, a restructuring project including the reduction of its destinations from around 140 to 70, the focus on the Berlin and Düsseldorf hubs and on the smaller bases in Stuttgart and Munich, the closure of six other bases, the targeting of business travellers, focus on domestic German flights and on flights to Italy, Scandinavia and eastern Europe, the expansion of its long-haul network, and the loss of up to 1,200 jobs.
From Wikipedia’s article on Air Berlin, shared under CC BY-SA 4.0.5