Drastic cuts

Joachim Hunold, head and founder of Air Berlin, announced Thursday that he was stepping down as the carrier's chief executive in September.

He recommended that former German Rail chairman, Hartmut Mehdorn, become the airline's new head to help the carrier press ahead with a cost-cutting program.

Investors welcomed the announcement, driving company shares up more than 4 percent on the German stock exchange.

This month, Air Berlin posted a second-quarter loss of nearly 44 million euros ($63 million) as fuel costs, a new aviation tax introduced in January and unrest in the Arab world undercut the group's earnings. In addition, the airline is sitting on top of a mountain of debt totaling more than 600 million euros.

Hunold said it was the right time to leave and that his departure would allow his successor to forge ahead with plans to make drastic cuts to the airline's fleet of aircraft and network of destinations.

Due to the global economic turbulence the airline, which is Germany's second largest after Lufthansa, plans to slash more than a million seats of capacity and take eight planes out of service by the end of this year.

The cost-cutting measures also include dropping unprofitable routes - in particular at smaller, regional airports - and concentrating activities at hubs in Berlin, Dusseldorf, Palma de Mallorca and Vienna.

"To become profitable again we need to make cuts to our destination network and fleet," Hunold said, adding that "our hubs already function and we will continue to expand them."

Author: Gregg Benzow (dpa, dapd, Reuters)
Editor: Martin Kuebler