German carrier Air Berlin says it wants to focus more on lucrative business travellers after operating profit almost halved in the second quarter as tough competition put pressure on fares.
Earnings before interest and tax fell 47.4 per cent to €23.5 million, but Air Berlin said it aimed for the full-year result to beat last year's €64 million.
"The sluggishness experienced by the aviation industry in the second quarter of 2007 did not leave Air Berlin unscathed," said Germany's second-biggest airline after Lufthansa.
"The downturn in demand, due to the weather and particularly noticeable in April, led to aggressive competition in the industry, and consequently to falling prices," it added.
Air Berlin shares fell over 7 per cent in early trade and were 5.8 percent lower sitting at €10.99 this morning, making them the worst performer on the German small-cap index, which was down 1.5 per cent.
The stock has lost a third of its value over the last three months, reducing its market capitalisation to €720 million.
Chief Executive Joachim Hunold said weeks of sunshine in Germany and rain around the Mediterranean, where the carrier serves numerous holiday destinations, hit demand from tourists.
Charter flights account for 37 per cent of turnover.
"The direction is already clear. Greater focus will be placed on business travel," Air Berlin said, adding that it would present its new strategy and route portfolio on September 20th.
Air Berlin as grown through the take over of domestic rival DBA last year and German holiday airline LTU this year to expand its network with feeder and intercontinental routes. But it said today the time taken to win cartel approval to buy LTU, which came earlier this month, had cost the carrier "a good €30 million" in net income.
Second-quarter net profit dropped to €12.1 million from €30.1 million in the same period a year ago, Air Berlin said, even as sales rose 4.8 per cent to €510.5 million.
This was also reflected in fare yields, which fell 5.4 per cent in the second quarter as the company increased available seat capacity by 12.4 per cent and passenger numbers rose 11.8 per cent to almost 6 million.
The increase in capacity had been necessary to secure future market shares and avoid losing slots at regulated airports, Air Berlin said.