airberlin interim financial report as of 31 march 2015

Transcription

1 airberlin interim financial report as of 31 march 2015 AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

2 FINANCIAL FIGURES Q1 FINANCIAL PERFORMANCE INDICATORS Q Q Revenue (in million euros) Revenue from ticket sales (in million euros) EBITDAR (in million euros) (13.9) (37.0) EBIT (in million euros) (159.9) (182.8) Consolidated profit/loss for the period (in million euros) (210.1) (209.8) Earnings per share (in euros) basic / diluted (1.85) (1.80) Total assets (in million euros) in comparison to financial year-end , ,863.6 Employees (as at 31 March) 9,155 8,694 Please note the following information: In the following report, Air Berlin PLC is referred to as the Company. References to airberlin, airberlin group, we or our refer to Air Berlin PLC or, depending on the context, Air Berlin PLC and/or its subsidiaries. disclaimer reservation regarding forward-looking statement This interim financial report contains forward-looking statements on Air Berlin PLC's business and earnings performance, which are based upon our current plans, estimates, forecasts, and expectations. The statements contain risks and uncertainties as there are a variety of factors which influence our business and to a great extent lie beyond our sphere of influence. Actual results and developments may, therefore, vary considerably from our current assumptions. Therefore, these are only valid at the time of publication. We undertake no obligation to revise our forward-looking statement in light of either new information or unexpected events. AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

3 MESSAGE FROM THE CHIEF EXECUTIVE OFFICER DEAR SHAREHOLDERS, The initial success of our structural measures, pro-active network management and the realignment of our revenue management system could be seen in the first quarter of Our yields, in particular are moving in the right direction. We were able to markedly raise our flight revenue and total revenue per passenger by 4 and 5 per cent, respectively. We intend to build on this progress. At the International Travel Trade Show in Berlin in early March, we announced a complete set of actions to strengthen our market presence. We launched our new fare concept for short- and medium-haul routes on 5 May. This concept includes significant enhancements through the addition of an attractive one-way fare "JustFly" and the FlyFlex+ service package for business travellers. We also recently announced the 2015 customer initiative, including the 24/7 service initiative where by mid-year we aim to reply to passengers' requests within 24 hours and process all customer requests within seven working days. Finally, we introduced the new brand "airberlin business benefits", bundling numerous benefits that corporate customers already enjoy at airberlin and further increasing the comfort and services offered to business travellers and corporate customers. Our goal is to become an industry leader for business and corporate customers. The response was very positive. The exclusive "JustFly" sneak preview with one million tickets available at the trade show was a particular success. Through new retail concepts and continuing to consistently implement our restructuring programme we can put your airberlin back on the road to profitability. As we previously announced, we will improve our results by further optimising the group's organisation and its processes along the value chain. These measures will be largely completed by the third quarter of the current financial year. We also plan in the current year to significantly improve our network structure, our scheduling and distribution. Finally, we want to set new standards in service quality through our 24/7 service initiative. The award we received at the international trade show for best price-performance for transportation, from the Handelsblatt newspaper and market research institute YouGov, recognizing 31 brands in the air transport, rental car and rail industries shows that we are on the right track. Further revenues should be generated by the continuing systematic development of our product, strengthening of our hubs and increasing our cooperation with our partner airlines. We especially anticipate a continuation of the dynamic growth momentum in codeshares. We expect this to lead to higher revenue per passenger in the current financial year. Notwithstanding that the restructuring programme will continue to put pressure on our earnings in 2015, we expect that the envisaged yield improvement will generate a noticeable earnings improvement in the 2015 financial year compared to BERLIN, MAY 2015 STEFAN PICHLER CHIEF EXECUTIVE OFFICER AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

4 FINANCIAL STATEMENTS AND NOTES THE AIRBERLIN SHARE SHARE PRICE PERFORMANCE The European stock markets and the German market in particular trended higher during the current financial year until the first half of April. Supported by high liquidity and a better economic outlook, stock prices rose strongly and some indices reached new highs. Since mid-april stagnation has set in. The index of European airlines has followed this trend relatively closely in a somewhat weaker form. The airberlin share ignored this trend initially and remained stable until early March. The introduction of the new airberlin fare concept for short- and medium-haul routes and the 2015 customer initiative at the International Travel Trade Show in Berlin sparked a strong rise in the share price in early March. Within a few days, the airberlin share gained 22 per cent and marked a year high on 6 March at a share price of EUR The share price then stabilized and was recently trading at a high level within a tight range. After closing the 2014 financial year at EUR 1.12, the closing price of the airberlin share on 31 March 2015 was EUR This represents a 9.9 per cent share price increase in the first quarter of COVERAGE OF THE AIRBERLIN SHARE In the first quarter of 2015, a total of four analysts or research houses covered the Company. One analyst recommended buying the airberlin share, one took a neutral stance on the share and two recommended selling or underweighting the share, respectively. Shareholder structure by nationality as at 31 March 2015 (in per cent) Germany United Arab Emirates Turkey Other EU countries / EEA countries 0.62 Other countries 0.36 Austria 0.48 Liechtenstein 0.21 Luxembourg 0.17 AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

5 FINANCIAL STATEMENTS AND NOTES Relative Performance airberlin vs. SDAX Price Index and the STOXX Europe Total Market Airlines Price Index (rebased on airberlin) EUR Source: Thomson Reuters AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

6 FINANCIAL STATEMENTS AND NOTES The Air Berlin PLC share in the first three months of 2015 Share capital: EUR und GBP Total number of issued and fully paid ordinary registered shares as at 31 March 2015: 116,800,508 Class: Ordinary registered shares Nominal value: EUR 0.25 Bloomberg symbol: AB1 GY Reuters symbol: AB1.DE ISIN: GB00B128C026 WKN: AB1000 Stock exchanges: XETRA, Frankfurt/Main; Regulated unofficial market: Berlin, Dusseldorf, Hamburg, Munich, Stuttgart Accounting standards: IAS/IFRS Market data for the first three months of 2015 Trading segment: Regulated market (Prime Standard) Primary industry: Transportation and logistics Industry group: Airlines Indices: Prime All Share, Classic All Share Designated Sponsors: Commerzbank AG Market capitalisation as at 31 March 2015: EUR million Free Float according to Deutsche Börse AG as of 31 March 2015: % Free Float market capitalisation as at 31 March 2015: EUR million Average trading volume Q in units (XETRA / all German exchanges): 338,296 / 438,505 As at 31 March 2015, the Company was aware of two shareholders who each held more than five per cent of the Company s outstanding shares: Etihad Airways holding per cent and ESAS Holding A.S. with per cent. All other shareholders represented less than 5 per cent of the outstanding shares. The shares are officially traded on XETRA as well as on the Frankfurt Stock Exchange. Trading on the regulated unofficial market takes place at the exchanges in Berlin, Dusseldorf, Hamburg, Munich and Stuttgart. airberlin shares are ordinary registered shares. A shareholder register is maintained to ensure compliance at all times with the aviation regulatory requirements on share ownership and effective control over the Company (EU Directive No. 1008/2008 and the air traffic agreements concluded between the Federal Republic of Germany and non-eu member states). The registrar for the shares is registrar services GmbH, Eschborn, Germany. "A shares" have also been issued. The company provides information about its on-going investor relations activities, ad-hoc notifications, IR releases, investor and analyst presentations, as well as all other mandatory reports and disclosures in a timely manner. This information may be found on its investor relations website at ir.airberlin.com. AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

7 FINANCIAL STATEMENTS AND NOTES STRATEGIC REPORT AND INTERIM MANAGEMENT REPORT ECONOMIC CONDITIONS The economy as a whole The European economy is profiting from a range of positive factors that include persistent low oil prices, historically low interest rates and a decline in the euro's value against the currencies of Europe's key trading partners. The drop in oil prices is providing the most benefit to export-oriented companies and consumers, who now have greater ability for additional consumer spending. Economic growth has picked up since the start of 2015 prompting growth estimates to move higher. Germany's continued robust labour market and higher employment figures are providing an additional boost. The customary spring pick-up in the labour market was stronger than usual in the current year. The German domestic economy received a strong boost from private consumption and consumer sentiment is positive a fact that is reflected by both consumers' expectations for higher income as well as the German consumer's propensity to buy, as was demonstrated by the GfK consumer confidence index (as of March 2015). Both categories grew by almost five per cent and six per cent, respectively, during the February to March period as released at 26 March The air travel sector The International Air Transport Association (IATA) reported positive industry developments during the first three months of The growth of revenue passenger kilometres (RPK) in the first quarter of 2015 was 6.1 per cent and was stronger than in the previous year's period (5.6 per cent). Due to a lower increase in the industry's capacity measured in terms of available seat kilometres (ASK per cent from 5.8 per cent), utilisation rose slightly from 78.5 per cent in the previous year's quarter to 78.8 per cent in the reporting quarter. The 5.4 per cent growth in RPK in Europe was slightly lower, but on a year-onyear basis it accelerated significantly compared to 4.7 per cent in the first quarter of This contrasted with the trend in capacity measured in terms of ASK where European carriers reported a rise in capacity in the reporting quarter of only 3.6 per cent after growing 5.5 per cent in the previous year's quarter. Utilisation rose accordingly by 1.2 percentage points to 80.8 per cent the highest level among all regions. There were major differences in the European traffic figures between the continued weak development in the euro zone and the strong growth in other countries particularly Turkey. IMPORTANT EVENTS IN THE FIRST QUARTER OF January 2015: airberlin achieved a record punctuality level of 85.7 per cent for the year This success was illustrated by airberlin's placement in the top ten most punctual airlines worldwide in the "6th Annual Airline On-Time Performance Service Awards" sponsored by the website flightstats.com, a leading online portal for the evaluation of flight data. 1 February 2015: Stefan Pichler is appointed Chief Executive Officer (CEO) und Chairman of the Management Board of the Company responsible for all group companies and brands. As CEO, Mr Pichler is also the Executive Director of the Board of Directors. He follows Wolfgang Prock-Schauer, who returned to his former position as Chief Strategy and Planning Officer. 17 February 2015: Arnd Schwierholz will assume the position of Chief Financial Officer (CFO) of the Company effective 1 April He follows Ulf Hüttmeyer, who was the group's CFO for the past nine years and who left airberlin on 30 April 2015 to accept a new position at Etihad Airways. 28 February 2015: Wolfgang Prock-Schauer resigns from airberlin. 2 March 2015: Dr Alfred Tacke joins the Board of Directors of the Company. He succeeds Heinz-Peter Schlüter who resigned from the Board of Directors after seven years of service. AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

8 FINANCIAL STATEMENTS AND NOTES Early March 2015 International Travel Trade Show in Berlin: airberlin presents its new fare concept for short- and mediumhaul flights starting on 5 May 2015 and gives details on the important aspects of the 2015 customer initiative. airberlin introduces a new brand "airberlin business benefits", which better highlights and bundles the numerous benefits for corporate customers. The comfort and service offered to business travellers and corporate customers will be also enhanced further. With this new concept, airberlin plans to become the industry leader for business and corporate customers. airberlin is recognised by the Handelsblatt newspaper and the market research institute YouGov as the price-performance champion in the area of mobility. This award was based on a survey using the YouGov brand monitor, BrandIndex, in which consumers evaluated the price-performance ratio, among other things, of 31 brands operating in the airline, rental car and short- and longdistance rail segments. BUSINESS DEVELOPMENT Report on operating performance The streamlining and focusing of our route network is part of the restructuring programme that began in 2014 and continues in As a result, capacity in the reporting quarter had a year-on-year decline of 4.0 per cent from 7,795,033 to 7,481,909 seats. The average capacity per flight declined 2.7 per cent in the course of harmonizing our fleet, falling from in the previous year s quarter to The harmonisation of the airberlin group's fleet based on Airbus aircraft continued in the reporting quarter. In the previous year s quarter there were 79 Airbus aircraft available and by the end of the reporting quarter this had increased to a total of 91 aircraft. During the same period, the number of Boeing aircraft fell by a total of seven to 39 aircraft. At the end of the 2014 financial year, the airberlin group still had 84 Airbus aircraft and 43 Boeing aircraft in operation. The airberlin group flew with a total of 150 aircraft at the end of the first quarter of 2015 after 143 aircraft at the end of the comparable quarter of the prior year and a total of 149 aircraft at the end of the 2014 financial year. At 46,022 take-offs, a total of 1.4 per cent fewer flights were carried out as in the prior year's quarter (46,662). The average flight distance grew 5.8 per cent to 1,581 kilometres increasing airberlin's total number of flight hours 2.4 per cent (86,091 hours from 84,100 hours in the previous year s quarter). The higher average flight distance is chiefly the result of the increased cooperation with our strategic partner Etihad Airways and the greater number of offers to the Etihad Airways hub in Abu Dhabi. The marked rise in block hours, not only in absolute terms (+2.0 per cent over the previous year's comparable period) but also per flight (+3.5 per cent above the same quarter in 2014) was supported by efficiency improvements on the ground that led to lower turnaround times between landings and take-offs. The number of passengers (PAX) declined 0.8 per cent to 5,810,397 passengers in the reporting quarter from 5,859,660 passengers in the first quarter of the prior year. Passenger figures rose sharply in March after a rather moderate start in the year. ASK in the reporting quarter grew a mere 1.5 per cent from billion in the comparable prior year's quarter to billion. This rise was significantly lower than the rise in RPK which increased 3.3 per cent from 9.53 billion in the prior year's quarter to 9.84 billion. As a result, utilisation in the first quarter of 2015 added 1.4 percentage points rising from 81.8 per cent to 83.2 per cent. There was a considerable improvement in yields in the reporting quarter compared to the same quarter in the previous year. Flight revenue (including taxes and securities fees) per PAX gained 4.0 per cent to from EUR in the same quarter of 2014 to EUR This improvement reflects the first signs of success of the new IT-based revenue management system. Total revenue per PAX grew 5.1 per cent from EUR in the same quarter of 2014 to EUR Based on ASK, total revenue in the reporting quarter was 2.6 per cent higher (from 6.54 eurocents in the same quarter of 2014 to 6.71 eurocents). Total revenue per RPK increased from 7.99 eurocents in the same quarter of 2014 to 8.06 eurocents. Operating expenses (EBIT excluding other operating expenses) per ASK grew slightly by 0.8 per cent to 8.20 eurocents after 8.14 eurocents in the same quarter of the previous year due to reporting date-related effects such as invoices for maintenance expenses. Excluding fuel expenses, operating expenses per ASK increased to 6.54 eurocents from 6.35 eurocents in the same quarter of the previous year. AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

9 FINANCIAL STATEMENTS AND NOTES Key operating figures for Q / % Q Q Aircraft (as at 31 March) Flights ,022 46,662 Destinations (as at 31 March) Passengers (PAX) ,810,397 5,859,660 Available seats (capacity) ,481,909 7,795,033 Available seat kilometres (billions; ASK) Revenue passenger kilometres (billions; RPK) Seat load factor (%; RPK/ASK) +1.4* Number of block hours ,188 96,235 * percentage points airberlin group's fleet of aircraft Number of aircraft 31 March March 2014 A A A A B B Q E Total Report on net assets, financial position, capital expenditure and financing Total assets at the close of the first three months of the 2015 financial year were 8.9 per cent higher rising from EUR 1,863.6 million as at 31 December 2014 to EUR 2,029.5 million. Assets include an increase in non-current assets that mainly resulted from slightly higher non-current trade accounts receivables and other receivables of 1.7 per cent from EUR million to EUR million. This increase was mainly due to reporting date-related currency effects concerning prepayments for leasing obligations that are contained therein. Because these prepayments are made in US dollars, the euro s decline since the end of 2014 caused a corresponding increase in the receivables reported in euro as of 31 March Current assets grew 15.3 per cent from EUR million to EUR 1,145.4 million. All items under current assets increased during the reporting quarter except for assets held for sale which declined by EUR 20.2 million to EUR million due to the sale of aircraft. Within current assets, trade accounts receivables and other receivables reported a significant rise of EUR 62.4 million to EUR million. This line-item was also impacted by reporting date-related effects: portions of the customary seasonal order bookings were still reported under receivables and not yet included in cash and cash equivalents. Bank deposits and cash balances increased from EUR million to EUR million also as a result of higher bookings as well as from cash proceeds from the sale of aircraft. Shareholders' equity declined from EUR million as of 31 December 2014 to EUR million as of 31 March 2015 in line with seasonal income development. Capital measures were not carried out during the reporting quarter. As expected, the fair value measurement of hedging instruments after taxes improved significantly compared to its level at the end of the 2014 financial year (from EUR million to EUR 84.5 million). Non-current liabilities fell 2.2 per cent to EUR million at the end of the reporting quarter from EUR million at the end of the 2014 financial year. This figure includes a decline in interest bearing liabilities from aircraft financing from EUR 90.0 million to EUR 59.4 million. Other non-current interest bearing liabilities grew by EUR 16.7 million to EUR million as a result of currency effects. Current interest bearing liabilities from aircraft financing also rose due to currency effects and AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

10 FINANCIAL STATEMENTS AND NOTES totalled EUR million at the end of the reporting quarter after amounting to EUR million. Other current interest bearing liabilities declined from EUR million as of 31 December 2014 to EUR million. The seasonal effects on bookings already mentioned brought about an increase of EUR million in advance payments from EUR million as of 31 December 2014 to EUR million at the end of the reporting quarter. The smaller rise compared to the EUR million increase in advance payments in the previous year's comparable quarter shows the effect of our new revenue management strategy. This strategy is no longer focused on achieving the highest number of early bookings possible but aims at optimising bookings to improve yields. In total, current liabilities at the end of the first quarter of 2015 were 21.8 per cent higher than the level at the end of 2014 (EUR 1,804.6 million from EUR 1,482.0 million). As of 31 March 2015, the sum of current and non-current interest bearing liabilities only changed slightly to EUR 1,069.3 million from a total of EUR 1,063.4 million at the 2014 financial year-end. The sum of current and non-current liabilities increased from EUR 2,279.1 million to EUR 2,584.5 million mainly due to the rise in bookings. Net debt declined to EUR million as of 31 March 2015 from EUR million as of the end of Net cash flows from operating activities after interest paid/received and taxes totalled EUR 10.9 million in the first three months of the current financial year (previous year's quarter: EUR 22.4 million). The cash outflow was mainly the result of the net loss for the period. Changes in working capital affecting cash flow included a total increase of EUR million in trade accounts receivables and other assets and prepaid expenses. This was contrasted by cash inflows from higher trade accounts payables and other current liabilities totalling EUR million. Cash Flow from investments in non-current fixed assets totalled EUR 4.9 million in the reporting quarter and disposals amounted to EUR 72.5 million. Cash flow from investing activities totalled EUR 66.1 million as of 31 March 2015 compared to EUR 22.8 million in the previous year's quarter. Cash flow from financing activities recorded a net outflow of EUR 34.5 million. The repayment of financial liabilities totalling EUR 63.6 million was offset by proceeds of EUR 29.1 million from the assumption of interest bearing liabilities. With net cash inflows of EUR 20.8 million, net cash and cash equivalents at the end of the first quarter of the current financial year amounted to EUR million. Results of operations Group revenue in the reporting quarter increased 4.2 per cent from EUR million in the prior year's first quarter to EUR million. Flight revenue was 3.4 per cent higher rising from EUR million to EUR million. The slight decline in the number of passengers was more than compensated for by a significant rise in yields. Revenues from ground services and other services rose 12.1 per cent in the reporting quarter from EUR 72.6 million in the previous year s quarter to EUR 81.4 million. Revenues from inflight sales grew 5.8 per cent to EUR 5.5 million from EUR 5.2 million. Other operating income in the reporting quarter totalled EUR 16.7 million from EUR 3.1 million in the previous year's comparable period. This figure reflects mainly income from aircraft sales in the amount of EUR 13.2 million. Operating expenses in the reporting quarter increased 2.4 per cent (from EUR million to EUR million) a much lower rise than that of revenue. Expenses for materials and services were 2.0 per cent higher at EUR million from EUR million. Fuel expenses managed to decline by 5.7 per cent from EUR million to EUR million despite adverse currency effects. The higher number of leased aircraft and the result of currency effects generated a 5.4 per cent rise in leasing expenses from EUR million in the previous year's quarter to EUR million. Costs for catering and in-flight sales increased from EUR 20.3 million in the previous year's quarter to EUR 26.5 million in the reporting quarter as a result of the longer average flight distances, among other things. The expense items allocated to "others" had a marked decline of 16.8 per cent from EUR 38.6 million to EUR 32.1 million. In contrast, expense items that cannot be directly controlled by airberlin reported a considerable increase. Airport fees rose 8.9 per cent from EUR million to EUR million in the reporting quarter. One-time effects and reporting date-related factors both played a role in this increase but are expected to be temporary in nature and should normalise in the further course of the year. The air transportation tax and navigation expenses both increased by 5.2 per cent: navigation expenses grew from EUR 50.3 million to EUR 52.9 million and air transportation taxes increased from EUR 30.8 million to EUR 32.4 million. Personnel costs rose due to wage increases in the course of 2014, due to personnel integrated from the Niki Labour Pool into the airberlin group and as a result of other expenses in connection with the current restructuring programme. Personnel costs grew by 12.9 per cent from EUR million to EUR million. The majority of the restructuring expenses included in AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

11 FINANCIAL STATEMENTS AND NOTES this figure could not be recognised in the 2014 financial year. Depreciation and amortisation was 37.9 per cent below the prior year's comparable quarter level falling from EUR 17.7 million to EUR 11.0 million primarily due to the lower number of owned aircraft. Other operating expenses remained at the prior year's level (EUR million from EUR million). While the majority of the individual items included in other operating expenses recorded significant declines, training expenses and other personnel expenses increased from EUR 5.3 million in the previous year s quarter to EUR 6.4 million in the reporting quarter as a result of necessary retraining in the course of the fleet's harmonisation. Expenses for maintenance, repair and overhaul of technical equipment also grew from EUR 60.4 million to EUR 69.2 million. This expense item can fluctuate extensively in the course of a year because, by nature, aircraft maintenance does not coincide with the reporting dates of quarterly financial statements. Despite these reporting date-related higher expenses and one-time costs from restructuring, the reporting quarter's results show a significant improvement in comparison to the previous year's quarter. Operating earnings before depreciation, amortisation and leasing costs (EBITDAR) improved by EUR 23.1 million to EUR 13.9 million following EUR 37.0 million in the previous year's quarter. Operating earnings before leasing expenses (EBITDA) increased by EUR 16.2 million from EUR million to EUR million. Operating income (EBIT) improved by EUR 22.9 million and totalled EUR million in the reporting quarter from EUR million in the previous year's first quarter. Net financing costs in the reporting quarter were reported at EUR 52.3 million from EUR 30.5 million in the previous year's quarter as a result of higher interest expenses related to the valuation of long term liabilities as well as changes from the fair value of derivatives. The loss before tax in the first quarter of 2015 amounted to EUR million from EUR million in the previous year's quarter. After a tax benefit of EUR 2.1 million (prior year: EUR 3.6 million), the result for the period was EUR million from EUR million in the previous year's quarter. Basic and diluted earnings per share were EUR 1.85 from EUR EMPLOYEES After the first three months of the 2015 financial year, the airberlin group employed a total of 9,155 employees compared to 8,694 at the end of the same quarter in the prior year and 8,440 at the end of financial year Of these, 4,072 employees (2014 year-end: 4,005) were employed as ground staff and 5,083 (2014 year-end: 4,435) were part of the flying crew. At the start of 2015, 751 employees from the NIKI Labour Pool were brought in as flight personnel and another 16 employees were added to the ground personnel of the airberlin group. At the end of the first quarter of 2015, the flight personnel consisted of 3,535 cabin crew and 1,548 cockpit crew (2014 year-end: 3,097 and 1,338). As at 31 March 2015, 65 young people were in training at airberlin (2014 year-end: 84). PRINCIPAL RISKS AND UNCERTAINTIES The risks mentioned in the chapter "Principal Risks and Uncertainties" found in the 2014 Annual Report, continue to be relevant and include, in particular, the macroeconomic and industry risks, market, competitive, regulatory, operating, procurement risks, as well as general political and wage policy-related, and legal and liability risks. REPORT ON FORECASTS AND OTHER STATEMENTS REGARDING EXPECTED DEVELOPMENT Overall economic and industry environment The German federal government believes the German economy is clearly in an upswing driven by strong domestic consumption. An added boost is coming from low oil prices and depreciation of the euro. The industrial indicators show a rising trend. Export activity has trended upward particularly since corporate export expectations have continued to improve. In its most recent statement on economic development, the federal government raised its forecast for German economic growth in 2015 to 1.8 per cent. The growth rate of the global economy is also improving slightly despite overall weak momentum. Above all, growth in the emerging markets remains subdued and expectations for China are for below-average growth and Russia is expected to slide into a recession in Positive stimulus is coming from the United States and the euro zone is recording a slight improvement in economic activity. This region is also seeing the impact of the weak euro and low oil prices on its eco- AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

12 FINANCIAL STATEMENTS AND NOTES nomic development. The European Central Bank is forecasting growth of 1.5 per cent in the euro area in The global economy is forecast to have real GDP growth of around 3.5 per cent. Despite falling yields, the IATA expects an improvement in earnings in 2015 for its member airlines, particularly as a result of the continued low raw material prices and growing volumes. The expected increase in passenger numbers worldwide is 6.8 per cent from 3.31 billion in 2014 to 3.53 billion in the current year and RPK is expected to grow 7.0 per cent from 6.13 trillion to 6.55 trillion. A decline in utilisation from 79.9 per cent to 79.6 per cent in 2015 is expected accompanied by fleet growth of 3.6 per cent and a rise in capacity of 5.5 per cent to 3.7 billion seats, or a 7.3 per cent rise in ASK. Utilisation in Europe is also expected to decline slightly because the ASK at 5.8 per cent will grow slightly more than the RPK (5.5 per cent). Based on EBIT, the industry s margin is expected to rise from 5.1 per cent in the previous year to 6.0 per cent worldwide in 2015 and net earnings are expected to rise from USD 19.9 billion in the previous year to a total of USD 25.0 billion. The net margin is expected to then increase from 2.7 per cent to 3.2 per cent. Net earnings of European airlines are expected to increase from USD 2.7 billion to USD 4.0 billion. This increase would result in a net margin of 1.8 per cent in the current year from 1.3 per cent in the previous year. Business development The first quarter of 2015 reported a visible improvement in revenues, higher cost savings and better performance as a result of the increased application of the new active revenue management system and the continued implementation of the restructuring programme. Reporting date-related factors and significant currency effects resulting from exchange rate volatility negatively distorted results. This impact is expected to balance out in the course of the year. The earnings development in 2015 will still be burdened by one-time costs from the restructuring process. In the 2014 financial year, a total of EUR 47.5 million in provisions was recognised for the current financial year. However, additional expenses, such as training costs in the course of the fleet's harmonisation, could not be included in these provisions. The current restructuring programme will continue during the 2015 financial year as planned. By the third quarter of 2015, all management structures and processes are expected to have been reviewed for their added value and control quality and adapted, if necessary. These measures should generate additional synergies and efficiency improvements. Potential improvements will also be exploited in network planning, revenue management and sales. As previously announced, on 5 May 2015, airberlin expanded its fare concept for short- and medium-haul routes in an effort to cater more specifically to the wishes and needs of its passengers. A significant enhancement in this regard is the attractive one-way fare "JustFly" at steeply discounted prices starting from EUR 44. Passengers had an opportunity to get an exclusive sneak preview of this fare at the International Travel Trade Show in Berlin in early March and the response was very encouraging. Additionally, airberlin now offers business travellers a special service package called FlyFlex+. With the addition of this package, airberlin's fare concept includes four fares: JustFly, FlyDeal, FlyClassic und FlyFlex+. In light of the risks presented in the risk report contained in our 2014 annual report, airberlin expects sold RPK to develop positively during the 2015 financial year and, despite continued strong price competition, expects an improvement in yields. Developments since the start of the year particularly the month-to-month comparisons show us the way: Despite a slight decline in passenger numbers compared to the prior year's comparable quarter, RPK rose significantly in the reporting quarter and utilisation have risen. Other positive effects on the trend in revenues are expected to come from the systematic development of the product range, advanced network optimisation and extended collaborations with our partners including among others, Etihad Airways and the oneworld alliance. The dynamic growth momentum we have had in recent years is expected to continue, especially in our codeshare business. Notwithstanding that the restructuring programme will continue to put pressure on our earnings in the 2015 financial year, we expect that the envisaged yield improvement will generate a noticeable earnings improvement in the 2015 financial year compared to AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

13 FINANCIAL STATEMENTS AND NOTES EVENTS AFTER THE REPORTING DATE 21 April 2015: airberlin cancels its membership in the Association of European Airlines (AEA). 24 April 2015: airberlin announces a realignment of the management team. In addition to his role as Accountable Manager, Captain Oliver Lackmann is appointed to the newly created position of Chief Flight Operations Officer (CFOO), as of 1 May 2015 and is responsible for flight operations, crew planning and training as well was Operations Compliance & Safety Management and Aviation Security Management. Marco Ciomperlik, previously the Chief Restructuring Officer, will assume the newly created position of Chief Production Officer (CPO) as of 1 May 2015 which includes responsibility for Hospitality including the future product strategy and operations along the entire service chain. This mainly includes the areas Airport Operations, Cabin Crew, Guest Experience, Maintenance and Network Operations. He also has responsibility for the subsidiaries airberlin technik and Leisure Cargo. As of 1 June 2015, Julio Rodriguez is named the new Chief Commercial Officer (CCO) responsible for Sales, Revenue Management and E-Commerce. BOARD OF DIRECTORS On the date of this report's publication, the Board of Directors of the Company was composed of the following directors: Executive Director Stefan Pichler, Chief Executive Officer Non Executive Directors Dr. Hans-Joachim Körber, Chairman of the Board of Directors James Hogan, Vice Chairman of the Board of Directors Joachim Hunold, Co-Vice Chairman of the Board of Directors Andries B. van Luijk James Rigney Ali Sabanci Dr. Lothar Steinebach Dr. Alfred Tacke Nicholas Teller Johannes Zurnieden Management Board Stefan Pichler Chief Executive Officer Arnd Schwierholz Chief Financial Officer Julio Rodriguez Chief Commercial Officer (as of 1 June 2015) Marco Ciomperlik Chief Production Officer Oliver Lackmann Chief Flight Operations Officer Dr. Martina Niemann Chief Human Resources Officer Approved by the Directors on 11 May 2015 STEFAN PICHLER CHIEF EXECUTIVE OFFICER AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

14 FINANCIAL STATEMENTS Air Berlin PLC CONSOLIDATED INCOME STATEMENT (UNAUDITED) for the period ended 31 March /15-3/15 1/14-3/ Revenue 793, ,800 Other operating income 16,660 3,074 Expenses for materials and services (645,996) (633,258) Personnel expenses (141,565) (125,439) Depreciation and amortisation (11,012) (17,674) Other operating expenses (171,684) (171,338) Operating expenses (970,257) (947,709) Result from operating activities (159,907) (182,835) Financial expenses (27,592) (21,141) Financial income Result on foreign exchange and derivatives, net (24,893) (9,596) Net financing costs (52,275) (30,532) Share of at equity investments, net of tax 0 0 Result before tax (212,182) (213,367) Income tax result 2,110 3,566 Result for the period (210,072) (209,801) of which: attributable to hybrid capital investors 5,918 0 of which: attributable to Air Berlin PLC shareholders (215,990) 0 Basic earnings per share in (1.85) (1.80) Diluted earnings per share in (1.85) (1.80) AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

15 FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME (UNAUDITED) 1/15-3/15 1/14-3/ Result for the period (210,072) (209,801) Foreign currency translation reserve 1, Effective portion of changes in fair value of hedging instruments 33,969 (10,196) Net change in fair value of hedging instruments transferred from equity to profit or loss 36,718 5,520 Income tax on other comprehensive income (1,736) 1,322 Other comprehensive income for the period, net of tax 70,721 (3,255) Total comprehensive income (139,351) (213,056) of which: attributable to hybrid capital investors 5,918 0 of which: attributable to Air Berlin PLC shareholders (145,269) (213,056) AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

16 FINANCIAL STATEMENTS Air Berlin PLC CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED) as of 31 March /03/ /12/ Assets Non-current assets Intangible assets 411, ,798 Property, plant and equipment 301, ,176 Trade and other receivables 97,103 85,303 Deferred tax asset 15,000 16,835 Positive market value of derivatives 1,042 8 Net defined benefit asset Deferred expenses 49,785 49,117 At equity investments 6,762 6,762 Non-current assets 884, ,708 Current assets Inventories 67,427 64,929 Trade and other receivables 458, ,483 Positive market value of derivatives 137,962 82,467 Deferred expenses 70,996 47,936 Assets held for sale 122, ,806 Cash and cash equivalents 287, ,229 Current assets 1,145, ,850 Total assets 2,029,523 1,863,558 AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

17 FINANCIAL STATEMENTS Air Berlin PLC CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED) as of 31 March /03/ /12/ Equity and liabilities Total equity Share capital 29,273 29,273 Share premium 435, ,085 Equity component of convertible bond Other capital reserves 217, ,056 Retained earnings (1,464,190) (1,248,200) Hedge accounting reserve, net of tax (84,482) (153,433) Foreign currency translation reserve 5,424 3,654 Remeasurement of the net defined benefit obligation (8,976) (8,976) Equity attributable to the shareholders of the Company (870,213) (724,944) Equity attributable to the hybrid capital investors 315, ,356 Total equity (554,939) (415,588) Non-current liabilities Interest-bearing liabilities due to aircraft financing 59,410 89,961 Interest-bearing liabilities 656, ,967 Provisions 6,034 6,095 Trade and other payables 36,435 37,201 Deferred tax liabilities 21,132 23,817 Negative market value of derivatives Non-current liabilities 779, ,134 Current liabilities Interest-bearing liabilities due to aircraft financing 138, ,758 Interest-bearing liabilities 214, ,714 Tax liabilities 3,198 3,266 Provisions 35,402 42,350 Trade and other payables 511, ,290 Negative market value of derivatives 226, ,548 Deferred income 19,473 19,654 Advanced payments received 655, ,432 Current liabilities 1,804,637 1,482,012 Total equity and liabilities 2,029,523 1,863,558 AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

18 FINANCIAL STATEMENTS Air Berlin PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) for the period ended 31 March 2015 Share capital Share premium Equity component of convertible bonds Other capital reserves Retained earnings Hedge accounting reserve, net of tax Foreign currency translation reserve Remeasurement of the net defined benefit liability Equity attributable to the shareholders of the Company Equity attributable to the hybrid capital investors Total equity Balances at 31 December , , ,056 (862,175) (5,904) 3,192 (3,188) (186,064) 0 (186,064) Loss for the period (209,801) (209,801) 0 (209,801) Other comprehensive income (3,354) 99 (3,255) (3,255) Total comprehensive income (209,801) (3,354) 99 0 (213,056) 0 (213,056) Balances at 31 March , , ,056 (1,071,976) (9,258) 3,291 (3,188) (399,120) 0 (399,120) Balances at 31 December , , ,056 (1,248,200) (153,433) 3,654 (8,976) (724,944) 309,356 (415,588) Loss for the period (215,990) (215,990) 5,918 (210,072) Other comprehensive income 68,951 1,770 70,721 70,721 Total comprehensive income (215,990) 68,951 1,770 0 (145,269) 5,918 (139,351) Balances at 31 March , , ,056 (1,464,190) (84,482) 5,424 (8,976) (870,213) 315,274 (554,939) AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

19 FINANCIAL STATEMENTS Air Berlin PLC CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) for the period ended 31 March /03/ /03/ Result for the period (210,072) (209,801) Adjustments to reconcile profit or loss to cash flows from operating activities: Depreciation and amortisation of non-current assets 11,012 17,674 Gain on disposal of non-current assets (13,248) (308) Increase in inventories (2,498) (1,134) Increase in trade accounts receivables (73,812) (126,352) Increase in other assets and prepaid expenses (70,183) (20,919) Deferred tax benefit (2,585) (3,791) Decrease in provisions (7,009) (508) Increase (Decrease) in trade accounts payable 24,878 (10,544) Increase in other current liabilities 291, ,372 Result on foreign exchange and derivatives, net 24,893 9,596 Interest expense 27,004 20,654 Interest income (211) (205) Income tax expense Other non-cash changes 1, Cash generated from operations 1,942 (942) Interest paid (12,523) (21,376) Interest received Income taxes paid (464) (223) Net cash flows from operating activities (10,869) (22,367) Purchases of non-current assets (4,921) (4,664) Net advanced receipts for non-current items 2,502 4,361 Loans given (4,000) 0 Proceeds from sale of tangible and intangible assets 72,526 31,775 Cash flow from investing activities 66,107 22,750 Principal payments on interest-bearing liabilities due to aircraft financing (63,608) (24,185) Drawdown of interest-bearing liabilities due to aircraft financing 29,131 0 Proceeds from issue of corporate bonds 0 76,125 Transaction costs related to issue of convertible bonds 0 (2,333) Cash flow from financing activities (34,477) 49,607 Change in cash and cash equivalents 20,761 49,990 Cash and cash equivalents at beginning of period 259, ,006 Foreign exchange revaluation on cash balances 7,596 (49) Cash and cash equivalents at end of period 287, ,947 thereof bank overdrafts used for cash management purposes (47) (52) thereof cash and cash equivalents in the statement of financial position 287, ,999 AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

20 FINANCIAL STATEMENTS NOTES TO THE CONDENSED FINANCIAL STATEMENTS AS OF 31 MARCH 2015 (Euro/USD/CHF in thousands, except share data) 1. REPORTING ENTITY The consolidated interim financial statements of Air Berlin PLC for the three months ended 31 March 2015 comprise Air Berlin PLC ( the Company ) and its subsidiaries (together referred to as airberlin or the Group ) and the Group s interest in associates. Air Berlin PLC is a company incorporated in England and Wales with its registered office in London. The corporate headquarters of airberlin are located in Berlin. The Company s ordinary shares are traded on the Frankfurt Stock Exchange. The Group financial statements as at, and for, the year ended 31 December 2014 prepared in accordance with IFRSs as adopted by the EU and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, are available from the Company s registered office and at ir.airberlin.com. Statutory accounts for 2014 have been delivered to the registrar of Companies in England and Wales. The auditors have reported on those accounts and their report (i) was unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 408 of the Companies act STATEMENT OF COMPLIANCE These consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standard (IFRS) IAS 34 Interim Financial Reporting as adopted by the EU. They have been neither reviewed nor audited and do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December This condensed set of financial statements was approved by the Directors on 11 May ACCOUNTING POLICIES AND CHANGES IN ACCOUNTING This interim report up to 31 March 2015 has been drawn up in accordance with IAS 34 and in compliance with the standards and interpretations applicable from 1 January 2015 as adopted by the EU. The Group has used the same accounting and valuation methods as for the consolidated financial statements for the year ended 31 December A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January None of them have material impact on the Group. 4. ESTIMATES The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these consolidated interim financial statements, the significant judgements made by management in applying the Group s accounting policies and the key sources of uncertainty related to estimates were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH

21 FINANCIAL STATEMENTS 5. SEASONALITY The aviation industry is subject to seasonal fluctuations. Due to holiday travellers, the summer months generally show the highest revenue from ticket sales. The Group attempts to minimise seasonal impacts by expanding the number of business travellers. For the twelve months ended 31 March 2015 the Group had revenue of 4,192,044 (prior year: 4,116,723) and result for the period after tax of 376,939 (prior year: -328,966). Furthermore, for the twelve months ended 31 March 2015 the EBIT amounted to 270,838 (prior year: -226,282). 6. NON-CURRENT ASSETS During the three months ended 31 March 2015 the Group acquired fixed assets with a cost of 14,281 (prior year: 8,262). Assets with a carrying amount of 879 were disposed of during the three months ended 31 March 2015 (prior year: 880). Capital commitments for property, plant and equipment amount to 0.4 bn USD (prior year: 3.3 bn USD). Assets held for sale Assets held for sale position includes seven aircraft which are expected to be sold by the Group. When publishing these financial statements all sales contracts have been signed and one transaction has been finally settled. The aircraft held for sale were written down to their fair values less costs to sell, based upon sales contracts. Non-current liabilities relating to aircraft financing of the aircraft held for sale have been classified to current liabilities. 7. SHARE CAPITAL Of airberlin s authorized share capital, 116,800,508 ordinary shares of 0.25 each and 50,000 A shares of 1.00 each were issued and fully paid up. Included in this amount are 177,600 treasury shares held by airberlin (through the Air Berlin Employee Share Trust). 8. BONDS AND HYBRID CAPITAL On 21 January 2014 the Group increased the aggregate principal amount of its bond placed on 19 April 2011 with a coupon of 8.25% per annum from 150,000 by 75,000 to the aggregate principal amount of 225,000 due for repayment in The notes were issued at % of their principal amount. Transaction costs incurred were 2,333. The bonds are measured at amortized cost. On 27 April 2014 the group issued a perpetual bond to its shareholder Etihad Airways PJSC in the total amount of 300,000. The drawdown of the bond was divided in three tranches each 100,000 and was paid out at 20 May 2014, 28 August 2014 and 23 October The perpetual bond has no maturity and bears an interest coupon of 8.0 % per annum. Interest coupons can be deferred indefinitely at the discretion of the Group. Settlement of all arrears of interest is payable only in the event that Group declares or pays dividend or repurchases its own shares. The perpetual bond bears a conversion right to convert the bonds into ordinary shares at a conversion price of 1.79 per ordinary share. Conversion to ordinary shares is at the discretion of the bond holder and can be exercised from the date of issue but is subject to the limitations imposed by the Articles of Association that the Group must at all times be controlled or majority owned by nationals of the European Community or European Economic Area. As these is no obligation on Group to repay the capital and can indefinitely defer payments of interest until dividend is declared (which is at the discretion of the Group) the perpetual bond is recognized as equity in the Group s consolidated statement of financial position. An amount of 15,274 was transferred from retained earnings to hybrid capital to reflect the amount of interest payable in such an event, thereof 5,918 in the reporting period. AIRBERLIN INTERIM FINANCIAL REPORT AS OF 31 MARCH