airberlin interim financial report as of 30 september 2015

Transcription

1 airberlin interim financial report as of 30 september 2015 AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER

2 FINANCIAL FIGURES Q3 Financial performance indicators Q Q M M 2014 Revenue (in million euros) 1, , , ,220.1 Flight revenue (in million euros) 1, , , ,960.0 EBITDAR (in million euros) EBIT (in million euros) (94.3) (114.8) Consolidated profit/loss for the period (in million euros) (191.4) (151.3) Earnings per share (in euros) basic / diluted 0.43/ /0.15 (1.80)/(1.80) (1.32)/(1.32) Total assets (in million euros) in comparison to 2014 financial year-end 1, ,863.6 Employees (as of 30 September) 9,021 8,530 Please note: 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 regarding forward-looking statements 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 control. Actual results and developments may, therefore, vary considerably from our current assumptions. We undertake no obligation to revise our forward-looking statements in light of either new information or unexpected events. AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER

3 MESSAGE FROM THE CHIEF EXECUTIVE OFFICER DEAR SHAREHOLDERS, European aviation continues to be characterised by fierce competition, particularly in terms of prices. This situation makes us all the more pleased with the development of our yields during the current financial year. After a slight increase in yields in the first half-year stemming from second quarter improvements, the trend accelerated during the third quarter and resulted in a 3.7 per cent rise. We have seen success from the comprehensive restructuring measures already implemented in some important areas, which include on-demand capacity adjustments, the on-going fleet harmonisation, refocusing of our revenue management, a new fare structure, customer-oriented production differentiation as well as other programmes. Our conviction that we are on the right track was reinforced by the yield improvements from the measures implemented in the first half of The impact of these measures became clear during the third quarter, which was the first full reporting period following their implementation. Using our improved sales and management structures, we are forging ahead with the realignment of our business model towards sustainably profitable markets. We are also enhancing the attractiveness of our product offers through several new offers in our Economy Class on long-haul flights that have been available since early September. The forty XL seats in our aircraft with ample leg room and freedom of movement are in strong demand, which shows us that even cost-conscious passengers reward good products. Of course, we are also keeping a sharp eye on our costs. The improvements made in our sales and management structures are improving efficiency. These benefits are being boosted by cost reductions and efficiencies that have emerged from our advanced fleet harmonisation and the elimination of unprofitable routes. Our unit costs have seen a significantly lower rise in both the reporting quarter and the nine-month period. It is important to point out that the current restructuring programme has resulted in extraordinary expenses, which are expected to phase out. Altogether, we are on track to achieve more competitive unit costs. During the reporting quarter, we came much closer to our primary goal of generating a lasting rise in our productivity in terms of both our revenues and costs. We continue to be optimistic that we will achieve a year-on-year improvement in our yields and operating earnings in the current financial year. BERLIN, NOVEMBER 2015 STEFAN PICHLER CHIEF EXECUTIVE OFFICER AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER

4 FINANCIAL STATEMENTS AND NOTES THE AIRBERLIN SHARE SHARE PRICE PERFORMANCE The third quarter initially began on a positive note for the financial markets supported in large part by the robust economic data from Europe and the US and growing optimism that an agreement would be reached on the Greek debt issue. Increasing pressure in the quarter came from negative economic signals from China and the massive correction on the Chinese stock market. As a result, the stock markets experienced a sharp decline through August. The sluggish recovery that followed mainly helped the European indices, which saw a modest rise from their lows. As of mid-september, the German stock market had to contend with the added pressure of heavy price declines in the automotive sector, which sent the benchmark DAX index far below the 10,000-point barrier. Despite the market s recent upturn, it remains fragile. Overall, the DAX price index dropped almost twelve per cent in the third quarter of 2015 to mark its sharpest quarterly fall in four years. The index of European airlines, in contrast, performed significantly better: The STOXX Europe Total Market Airlines price index closed the quarter with a gain of nearly ten per cent. In the first nine months of 2015, the DAX price index lost four per cent while the sector index gained a total of almost 22 per cent. During the first nine months of 2015, the airberlin share hovered around its 2014 year-end closing price of EUR airberlin marked its year-to-date high on 6 March at EUR The share price fell almost 15 per cent to a year-to-date low of EUR 0.87 on 29 September. Since then, the share price has remained weak. The share s closing price on 30 September 2015 was EUR COVERAGE OF THE AIRBERLIN SHARE In the third quarter of 2015, a total of four analysts and research houses covered airberlin. One analyst recommended buying the shares, and the remaining three analysts respectively recommended underweighting, selling and reducing holdings in the share. Shareholder structure by nationality as at 30 September 2015 (in per cent) Germany United Arab Emirates Turkey Austria 0.81 Switzerland 0.39 Liechtenstein/Büsingen 0.21 Other EU countries / EEA countries 0.78 Other countries 0.60 AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER

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 30 SEPTEMBER

6 FINANCIAL STATEMENTS AND NOTES The Air Berlin PLC share in the first nine months of 2015 Share capital: EUR 29,200,127 and GBP 50,000 Total number of issued and fully paid ordinary registered shares as at 30 September 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 nine 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 Sponsor: Commerzbank AG Market capitalisation as at 30 September 2015: EUR million Free Float according to Deutsche Börse AG as of 30 September 2015: % Free Float market capitalisation as at 30 September 2015: EUR million Average trading volume Q in units (XETRA / all German exchanges): 71,477 / 99,467 Average trading volume 9M 2015 in units (XETRA / all German exchanges): 182,176 / 241,062 As at 30 September 2015, the Company was aware of two shareholders who each held more than five per cent of the Company s outstanding shares: Etihad Airways PJSC holding per cent and ESAS Holding A.S. with per cent. All other shareholders held 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 30 SEPTEMBER

7 FINANCIAL STATEMENTS AND NOTES STRATEGIC REPORT AND INTERIM MANAGEMENT REPORT ECONOMIC CONDITIONS The economy as a whole The global economy has lost considerable steam since the start of the year. Consequently, both governments and economists have made modest reductions to their estimates in their recent fall forecasts. The International Monetary Fund (IMF) attributes the growth decline in 2015 primarily on significant slowdowns in some of the emerging markets. The key causes of these slowdowns were price declines in commodities that are important for these countries as well as the slowdown of the Chinese economic boom and recessionary developments in Russia. The effects of low commodity prices and weakness in the emerging markets are carrying over to several of the industrialised countries. Nevertheless, the IMF still expects economies in the industrialised countries and regions particularly the US and the euro zone to continue to pick up for the rest of the year. The declines in commodity prices and continued low interest rates are having a positive impact on the respective domestic economies of these countries and especially on consumer demand. The euro zone is experiencing a noticeable upturn, particularly in Spain and Italy where economic reforms are now adding a significant boost to those economies. Germany continues to be one of the growth drivers in the euro zone, even though its foreign trade is also seeing the impact of the slowdown in the emerging markets. The low euro, however, is providing some support to exports. The German federal government and the International Monetary Fund have slightly reduced their forecasts for Germany. Both, however, continue to expect steady growth supported by a robust domestic economy. The air travel sector The member airlines of the International Air Transport Association (IATA), particularly the European airlines, had a very satisfactory performance in the third quarter of The global growth in the airlines revenue passenger kilometres (RPK) continued to outpace the rise in available seat kilometres (ASK). The quarter s strength helped the airlines RPK outpace capacity in the nine-month period even faster than in the first six months of In the nine-month period, RPK increased 7.3 per cent year-on-year whereas capacity rose only 6.2 per cent. This led to a 0.4 percentage point rise in utilisation (RPK divided by ASK) to 80.7 per cent in the first nine months of 2015 compared to the previous year s period. In fact, utilisation reached a record high of 84.7 per cent in August. Rising 7.5 per cent, the European airlines reported an above-average expansion in their RPK. The quarter s strength in Europe becomes very clear when this expansion is compared to the below-average rise in RPK recorded mid-year (+4.8 per cent vs. 6.3 per cent). The European airlines also significantly raised their capacity by a total of 7.0 per cent in the nine-month period in comparison to a mere 4.2 per cent increase in mid Because this rise was still below RPK growth, the utilisation levels of European airlines grew to 84.3 per cent by the end of September after reaching 79.8 per cent in mid Utilisation was at a level of 84.7 per cent for the nine-month period of During last year s period, capacity increased only marginally due to extensive strikes. The positive development in Europe since the start of 2015 continued during the reporting quarter with Europe recording the highest utilisation rate internationally in the first nine months of the current year. BUSINESS DEVELOPMENT Report on operating performance Under the current restructuring programme, we are streamlining our route network to focus on destinations that fill capacity and are therefore expected to be more profitable. As a result, capacity in the first nine months of the current financial year declined year-on-year by 6.6 per cent from 30,979,018 to 28,939,147 seats. In the reporting quarter, capacity was reduced by 6.9 per cent from 12,136,850 seats in the previous year s quarter to 11,297,368 seats. airberlin group s fleet harmonisation based on Airbus aircraft continued on schedule during the reporting quarter. Two Boeing aircraft were sold and one additional Airbus aircraft was brought into operation leaving the fleet with one less aircraft compared to 30 June 2015 for a total of 148. At the end of the same period last year, the total was 148 aircraft and at the end of the 2014 financial year the total was 149 aircraft. There were 82 Airbus aircraft at the end of the first nine months of the AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER

8 DIRECTORS REPORT FINANCIAL STATEMENTS AND NOTES previous year and a total of 96 on 30 September of the current financial year. The number of Boeing aircraft fell by a total of 12 to 33 aircraft during the same period. At the end of the 2014 financial year, the airberlin group still had 84 Airbus aircraft and 43 Boeing aircraft in operation. At 173,872 take-offs, a total of 5.1 per cent fewer flights were conducted compared to the prior year s nine-month period (183,262). The average flight distance grew slightly by 2.2 per cent to 1,497 kilometres, and airberlin s total number of flight hours decreased by 4.4 per cent for a total of 318,679 hours compared to 333,207 hours in the previous year s period. The +0.7 per cent rise in block hours per flight over the previous year s comparable period was supported by efficiency improvements on the ground that led to lower turnaround times between take-offs and landings. The 4.5 per cent decline in the number of block hours in the nine-month period was less pronounced than the decline in the number of flights. The number of passengers (PAX) in the first nine months of 2015 declined from 24,838,203 to 23,769,569 passengers, or 4.3 per cent year-on-year (Q vs. Q3 2014: 4.6 per cent to 9,733,950 passengers). The decline in passenger numbers was substantially lower than the decline in capacity in both the reporting quarter as well as in the nine-month period. This capacity reduction was naturally accompanied by a decline in available seat kilometres (ASK). In the reporting quarter, ASK amounted to billion and was 6.3 per cent lower year-on-year. For the nine-month period, ASK fell 4.6 per cent in comparison to the same period last year (43.31 billion after billion). There was a much lower decline in revenue passenger kilometres (RPK), which fell 5.1 per cent from billion to billion in the reporting period and by 3.9 per cent from billion to billion in the nine-month period. As a result, utilisation in the first nine months of the 2015 financial year rose 0.7 percentage points to 84.8 per cent from 84.1 per cent in the prior year s comparable period. Both on a European and global scale, airberlin s utilisation lies above the industry average. In the face of an intensive competitive environment, yields in the first nine months of the current financial year were slightly better than in the previous year s comparable period but did see a marked acceleration in the third quarter. This acceleration indicates that the new revenue management system, the new fare concept and additional measures are showing some success. The key elements of these additional measures were completed in the reporting quarter and include optimising management and sales structures within the airberlin group and the expansion of offers in the Economy Class on long-haul routes. Flight revenue (including taxes and security fees) per PAX gained 3.7 per cent year-on-year in the reporting quarter rising from EUR to EUR and gained 1.9 per cent in the nine-month period from EUR to EUR Total revenue per PAX increased 3.9 per cent in the reporting quarter from EUR to EUR (9M: from EUR to EUR ; +2.7 per cent). Total revenue per ASK in the 2015 nine-month period was 3.0 per cent higher year-on-year rising from 7.09 eurocents to 7.31 eurocents. The increase in the reporting quarter alone from 7.40 eurocents to 7.83 eurocents was nearly double that amount at 5.8 per cent. Total revenue per RPK in the third quarter grew 4.5 per cent from 8.49 eurocents to 8.87 eurocents. In the nine-month period, the rise was 2.3 per cent from 8.43 eurocents to 8.62 eurocents. Operating expenses per ASK (at the EBIT level including other operating income) grew by 5.2 per cent year-on-year in the reporting quarter from 6.97 eurocents to 7.34 eurocents. Excluding fuel expenses, they increased to 5.68 eurocents from 5.21 eurocents (+9.0 per cent). In the 2015 nine-month period, operating expenses per ASK (at the EBIT level including other operating income) including fuel expenses rose 2.4 per cent from 7.35 eurocents to 7.53 eurocents. Excluding fuel expenses, the rise was 4.8 per cent year-on-year from 5.59 eurocents to 5.85 eurocents. AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER

9 DIRECTORS REPORT FINANCIAL STATEMENTS AND NOTES Key operating figures for Q / % Q Q Aircraft (as at 30 September) +/ Flights ,944 71,270 Destinations (as at 30 September) Passengers (PAX) 4.6 9,733,950 10,204,406 Available seats (capacity) ,297,368 12,136,850 Available seat kilometres (billions; ASK) Revenue passenger kilometres (billions; RPK) Seat load factor (%; RPK/ASK) +1.1* Number of block hours , ,425 * percentage points Key operating figures for 9M / % 9M M 2014 Aircraft (as at 30 September) +/ Flights , ,262 Destinations (as at 30 September; cumulative) Passengers (PAX) ,769,569 24,838,203 Available seats (capacity) ,939,147 30,979,018 Available seat kilometres (billions; ASK) Revenue passenger kilometres (billions; RPK) Seat load factor (%; RPK/ASK) +0.7* Number of block hours , ,019 * percentage points airberlin group s fleet of aircraft Number of aircraft 30 September September 2014 A A A A B B Q Saab E Total Report on net assets, financial position, capital expenditure and financing Total assets at the close of the first nine months of the current financial year were 9.0 per cent lower than their level on 31 December 2014 (declining from EUR 1,863.6 million to EUR 1,696.7 million). Property, plant and equipment within non-current assets declined by 32.5 per cent to EUR million through aircraft sales. This contrasted with a rise in non-current trade and other receivables, which was mainly due to reporting date-related currency effects concerning prepayments in US dollars for leasing obligations. Overall, non-current assets fell by 7.2 per cent amounting to EUR million at the end of the first nine months of the current financial year compared to EUR million at the end of the 2014 financial year. AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER

10 DIRECTORS REPORT FINANCIAL STATEMENTS AND NOTES Current assets declined 10.5 per cent from EUR million to EUR million. In the first half of 2015, assets held for sale declined by EUR million due to aircraft sales. Although the sale of three additional aircraft was recognised in profit and loss in the reporting quarter, as of 30 September 2015, the assets held for sale still amounted to EUR 40.1 million. Trade and other receivables were reduced sharply in the reporting quarter due to seasonal developments. As a result of reporting date-related effects (the high level of seasonal order bookings is still largely contained in receivables and not yet included in cash and cash equivalents), trade and other receivables still amounted to EUR million by mid-year but by the end of the reporting quarter were reduced to EUR million, or slightly lower than their 2014 year-end level of EUR million. Cash and cash equivalents at the end of the first nine months of 2015 were EUR million after amounting to EUR million on 31 December Shareholders equity declined from EUR million on 31 December 2014 to EUR million as of 30 September No capital measures were carried out during the current financial year. The fair value measurement of derivatives net of taxes declined from EUR million to EUR 83.7 million. Non-current liabilities at the end of the reporting quarter amounted to EUR million after totalling EUR million at the end of the 2014 financial year. Within this item, interest-bearing liabilities from aircraft financing more than halved as a result of the sale of three aircraft and the repayment of the related liabilities. As of 30 September 2015, interest-bearing liabilities from aircraft financing amounted to EUR 42.5 million from EUR 90.0 million at the end of the 2014 financial year. Other non-current interest-bearing liabilities increased to EUR million as a result of a shareholder loan of USD 50.0 million paid out in July and the assumption of other loans of a net EUR million by EA Partners I B.V., from its issuance of a structured bond on the bond market. The sum of the remaining positions contained in non-current liabilities amounted to EUR 83.9 million following EUR 67.1 million in the same period of This rise is mainly due to higher non-current trade and other payables. Current interest-bearing liabilities from aircraft financing were reduced further in the reporting quarter to EUR 35.9 million for the reasons mentioned above following their level of EUR million as of 31 December Other current interestbearing liabilities amounted to EUR million at the end of the reporting quarter and were below their level of EUR million as of 31 December After a typical seasonal peak in the middle of the year, advance payments declined in the third quarter to EUR million and were close to their level at the end of the 2014 financial year (EUR million). Trade and other payables grew from EUR million on 31 December 2014 to EUR million at the end of the reporting quarter. This item is also affected by typical seasonality and amounted to EUR million in mid Since the end of the 2014 fiscal year and in line with the typical seasonal pattern, the current negative fair values of derivatives (the non-current portion is immaterial) have more than halved from EUR million to EUR million at the end of the reporting period. Overall, current liabilities at the end of the 2015 nine-month period were 12.2 per cent below their level at the end of 2014 (declining to EUR 1,301.0 million from EUR 1,482.0 million). The sum of non-current and current interest-bearing liabilities as of 30 September 2015 came to EUR 1,104.4 million after EUR 1,063.4 million at the end of the 2014 financial year, and the sum of non-current and current liabilities overall totalled EUR 2,240.7 million following EUR 2,279.1 million for the same period. As of 30 September 2015, net debt was EUR million reduced from EUR million on the 2014 financial year end. Net cash flows from operating activities after interest paid/received and taxes improved in the first nine months of the current financial year to EUR million after their level of EUR million in the same period of the previous year. This improvement was mainly the result of positive effects from working capital reductions. The adjustment of the reported result for the period for the non-cash result from foreign exchange and derivatives contained in net financing costs also had a positive effect on cash flows. Investments in non-current fixed assets in the nine-month reporting period totalled EUR 22.8 million from EUR 18.2 million in the previous year s comparable period. The sale of assets brought proceeds of EUR million. Cash flow from investing activities totalled EUR million as of 30 September 2015, compared to EUR 72.6 million in the previous year s nine-month period. Cash flow from financing activities recorded a net inflow of EUR 8.5 million. The repayment of financial liabilities of EUR million was offset by proceeds of a net EUR million from the assumption of financial liabilities. At the end of the first nine months of the current financial year, net cash and cash equivalents amounted to EUR million. AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER

11 DIRECTORS REPORT FINANCIAL STATEMENTS AND NOTES Results of operations Third quarter of 2015 Despite a 6.9 per cent reduction in capacity, group revenue in the reporting quarter held steady at the previous year s level (EUR 1,311.9 million) and totalled EUR 1,300.9 million. The same was true for flight revenue, which amounted to EUR 1,205.7 million from EUR 1,218.6 million in the previous year. Yields increased as a result of the comparably sharper decline in the number of passengers following the capacity optimisation measures carried out in the reporting quarter. Ancillary revenues from ground services and other services also improved by 3.2 per cent to EUR 86.5 million from EUR 83.8 million in the previous year s comparable quarter. Revenues from inflight sales were marginally lower declining from EUR 9.5 million to EUR 8.7 million. Other operating income in the reporting quarter totalled EUR 15.7 million from EUR 2.7 million in the previous year s quarter. This figure reflected higher income from aircraft sales that were completed in the second quarter but were not yet recognised by the 30 June 2015 reporting date. Operating expenses in the reporting quarter were down only slightly from EUR 1,239.7 million in the prior year s quarter to EUR 1,235.1 million. Personnel expenses were higher at EUR million following EUR million in the prior year s comparable quarter. As already mentioned in the 2015 first quarter report, this increase resulted from the wage increases in the course of 2014, the higher number of employees following the integration of employees from the NIKI Labour Pool into the airberlin group and expenses in connection with the current restructuring programme. Expenses for materials and services were 3.0 per cent lower at EUR million following EUR million in the comparable period of the previous year. As a result of lower fuel prices and fewer flights fuel expenses declined by 11.9 per cent from EUR million in the comparable period to EUR million. This decline was limited by hedging transactions for fuel prices and by the strong US dollar the global transaction currency for fuel markets. The higher number of leased aircraft and the strong US dollar generated a 15.2 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 declined 5.8 per cent from EUR 38.0 million to EUR 35.8 million. The expense items allocated to "others" had another marked decline in the reporting quarter, which was similar to the decline year-to-date, and dropped 21 per cent from EUR 45.0 million in the third quarter of 2014 to EUR 35.5 million. The expense items that are mainly correlated to the number of flights ( 4.1 per cent) but not directly controlled by airberlin dropped in some areas but rose in others. For example, airport fee expenses increased by 0.9 per cent (from EUR million to EUR million) and the air transportation tax rose 0.9 per cent (from EUR 43.7 million to EUR 44.1 million). Navigation expenses, on the other hand, fell by 3.2 per cent from EUR 81.7 million to EUR 79.1 million. Depreciation and amortisation was considerably lower year-on-year amounting to EUR 10.8 million following EUR 17.8 million. This decline was primarily due to fewer owned aircraft. Other operating expenses in the reporting quarter increased from EUR million in the comparable quarter of the previous year to EUR million in the reporting quarter. Continuing the trend seen so far this year, nearly all of the items included under operating expenses in the reporting quarter saw a decline and at times a significant decline. Operating earnings before depreciation, amortisation and leasing expenses (EBITDAR) in the reporting quarter rose to EUR million from EUR million in the previous year s quarter. Operating earnings before leasing expenses (EBITDA) amounted to EUR 92.3 million from EUR 92.7 million in the comparable quarter of the previous year and the result from operating activities (EBIT) was EUR 81.4 million after EUR 74.9 million. Financing costs continued to benefit from substantially lower interest expenses on financial liabilities (EUR 22.9 million to EUR 25.6 million from the 2014 third quarter). Financial income (EUR 0.2 million from EUR 0.1 million) and the result on foreign exchange and derivatives resulting from the measurement as of the reporting date (EUR 1.7 million from EUR 1.2 million) both improved. Net financing costs totalled EUR 20.9 million in the reporting quarter after EUR 24.5 million in the previous year s quarter. The profit before tax in the third quarter of 2015 amounted to EUR 60.5 million after EUR 50.4 million in the previous year s quarter. After-tax expenses of EUR 4.3 million (previous year: EUR 0.6 million), the result for the period was EUR 56.2 million from EUR 49.9 million in the previous year s quarter. Basic earnings per share amounted to EUR 0.43 and diluted earnings per share were EUR 0.17 compared to EUR 0.41 and EUR 0.15 in the previous year s quarter. AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER

12 DIRECTORS REPORT FINANCIAL STATEMENTS AND NOTES First nine months of 2015 In the 2015 nine-month period, revenue of EUR 3,165.5 million was generated compared to EUR 3,220.1 million in the previous year s period. Other operating income totalled EUR 62.6 million after EUR 10.6 million. Operating expenses declined to EUR 3,322.4 million from EUR 3,345.5 million. The result from operating activities improved to EUR 94.3 million from EUR million in the 2014 nine-month period. Net financing costs for the first nine months of 2015 amounted to EUR 93.9 million after EUR 45.6 million in the prior period. After-tax expenses of EUR 3.2 million (tax benefits in the first nine months of 2014: EUR 9.0 million), the result for the 2015 nine-month period amounted to EUR million following EUR million in the comparable period of the previous year. Basic and diluted earnings per share were EUR 1.80 after EUR 1.32 for the same period last year. EMPLOYEES At the end of the first nine months of the 2015 financial year, the airberlin group employed a total of 9,021 employees compared to 8,530 at the end of the same quarter in the previous year and 8,440 at the end of the 2014 financial year. Of this number, 4,047 employees (2014 year-end: 4,005) were employed as ground staff, and 4,974 (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 16 employees from the NIKI Labour Pool were added to the ground personnel of the airberlin group. In the third quarter of 2015, the flight personnel consisted of 3,462 cabin crew and 1,512 cockpit crew (2014 year-end: 3,097 cabin crew and 1,338 cockpit crew). As at 30 September 2015, 81 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 macroeconomic and industry risks; market, competitive, regulatory, operating and procurement risks; general political and wage policy-related and legal and liability risks. New material risks did not arise during the reporting period. In October 2015 the German Federal Ministry of Transport and Digital Infrastructure approved all joint (codeshare) flights between Etihad Airways and airberlin, for which approval had been sought for the winter flight plan, until 15 January At the same time, the Ministry declared that it currently plans to not approve all of these flights after this date. In the event that the mutual marketing of the affected flights by airberlin and Etihad Airways is no longer authorised, airberlin may suffer a decline in utilisation and revenue. RELATED PARTY TRANSACTIONS There were no related party transactions entered into during the first nine months of 2015 that had a material influence on the financial position or results of the Company. On 23 July 2015, the airberlin group received USD 50.0 million from a secured loan from a commitment made in 2013 by the airberlin group s major shareholder, Etihad Airways PJSC. The outstanding amount as of 30 September 2015, was EUR 45.3 million, including accrued interest. The statements regarding related party transactions contained in the 2014 Annual Report in Note 31 to the Financial Statements continue to be valid. REPORT ON FORECASTS AND OTHER STATEMENTS REGARDING EXPECTED DEVELOPMENT Overall economic and industry environment In its October 2015 outlook, the IMF forecasts that the positive trend in the global economy will weaken following the drop in commodity prices but will generally continue and even sharply accelerate in the upcoming year. The main contributor to this acceleration is expected to be the recovery in the emerging and industrialised countries that suffered most from recession and low growth in the current year. This recovery is expected to compensate for the slowdown in China. The IMF believes the most significant risk to the global economy is the danger of a continued fall in commodity prices. This would not only continue to hamper the 2016 economic development of countries exporting these commodities, but further lower demand from these countries would also have a negative effect on the economies of other countries. AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER

13 DIRECTORS REPORT FINANCIAL STATEMENTS AND NOTES In Europe, the current year s positive development is expected to carry on and even be slightly stronger in The continuation of favourable factors such as low inflation, availability of liquidity, low interest rates, low commodity prices and, in particular, the depreciation of the euro will all serve to stimulate the European economy. The IMF continues to project real GDP growth in the euro zone in 2015 of 1.5 per cent and a rise to 1.6 per cent in The developed countries are expected to generate real economic growth of 2.0 per cent in 2015 and 2.2 per cent in 2016, despite the recent trim in expectations for the US. With projections of 6.8 per cent in 2015 and 6.3 per cent 2016, a multi-year slowdown in growth is expected in China, whereas Russia is expected to remain in recession in 2016, but with better prospects than in the current year. The IMF expects Germany to report real GDP growth in 2015 of 1.5 per cent and 1.6 per cent in The German federal government is somewhat more optimistic and in its fall forecast predicts Germany s economy to grow by 1.7 and 1.8 per cent, respectively. IATA remains optimistic for 2015 maintaining its overall positive outlook published in June for continued strong growth in all major regions of the world. Demand is being stimulated by lower oil prices, which in turn are reflected in lower ticket prices. Additionally, the growth slowdown in China and other Far Eastern countries has not yet led to weaker traffic figures in the Asian markets. The European airlines benefitted from the region s improving economic environment, and higher demand in the US during the second half of 2015 supports developments in that region. Business development In the first nine months of the 2015 financial year, numerous measures were successfully implemented to save costs, improve performance and increase yields. The improvement in yields, in particular, benefited from the new proactive revenue management system and new fare structure, both of which were in operation for a full quarter for the first time. Revenues were also enhanced by improvements in sales and management structures. Substantial currency effects due to the strong USD continued to distort results, even though these effects weakened during the year particularly in the currency effects within the financial result. Lower one-time expenses from the ongoing restructuring process, which is progressing as scheduled, is expected to continue in the fourth quarter of In light of the risks presented in the risk report of our 2014 annual report, airberlin still expects sold RPK to continue its positive trend during the 2015 financial year and to see an improvement in yields despite stiff price competition. The improvement in yields in particular highlights the effectiveness of the measures implemented in the first nine months of We also expect a positive impact on the trend in revenues from the systematic development of the product range, the advances made in network optimisation and the expanded collaborations with our partners such as Etihad Airways and those within the oneworld alliance. Taking everything into account, we expect the operating earnings to increase in the 2015 financial year. AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER

14 DIRECTORS REPORT FINANCIAL STATEMENTS AND NOTES BOARD OF DIRECTORS AND MANAGEMENT BOARD On the date of this report s publication, the Board of Directors and the Management Board of the Company were 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 Ismail Sabanci Dr. Lothar Steinebach Dr. Alfred Tacke Nicholas Teller Johannes Zurnieden Management Board Stefan Pichler Arnd Schwierholz Marco Ciomperlik Oliver Lackmann Julio Rodriguez Dr. Martina Niemann Chief Executive Officer Chief Financial Officer Chief Production Officer Chief Flight Operations Officer Chief Commercial Officer Chief Human Resources Officer Approved by the Directors on 10 November 2015 STEFAN PICHLER CHIEF EXECUTIVE OFFICER AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER

15 FINANCIAL STATEMENTS Air Berlin PLC CONSOLIDATED INCOME STATEMENT (UNAUDITED) for the period ended 30 September /15-9/15 1/14-9/14 7/15-9/15 7/14-9/ Revenue 3,165,497 3,220,116 1,300,851 1,311,927 Other operating income 62,605 10,647 15,703 2,721 Expenses for materials and services (2,345,886) (2,396,132) (897,059) (924,554) Personnel expenses (426,873) (396,297) (143,120) (135,795) Depreciation and amortization (35,834) (53,117) (10,835) (17,836) Other operating expenses (513,852) (499,982) (184,121) (161,538) Operating expenses (3,322,445) (3,345,528) (1,235,135) (1,239,723) Result from operating activities (94,343) (114,765) 81,419 74,925 Financial expenses (71,118) (73,126) (22,857) (25,632) Financial income 704 4, (97) Result on foreign exchange and derivatives, net (23,479) 23,431 1,717 1,237 Net financing costs (93,893) (45,570) (20,904) (24,492) Share of at equity investments, net of tax Result before tax (188,236) (160,332) 60,515 50,433 Income tax result (3,173) 9,033 (4,315) (555) Result for the period (191,409) (151,299) 56,200 49,878 of which: attributable to hybrid capital investors 18,006 3,000 6,105 2,082 of which: attributable to Air Berlin PLC shareholders (209,415) (154,299) 50,095 47,796 Basic earnings per share in (1,80) (1,32) 0,43 0,41 Diluted earnings per share in (1,80) (1,32) 0,17 0,15 AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER

16 FINANCIAL STATEMENTS Air Berlin PLC CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME (UNAUDITED) for the period ended 30 September /15-9/15 1/14-9/14 7/15-9/15 7/14-9/ Result for the period (191,409) (151,299) 56,200 49,878 Foreign currency translation reserve 1, (511) 11 Effective portion of changes in fair value of hedging instruments (35,169) 29,418 (82,029) 17,352 Net change in fair value of hedging instruments transferred from equity to profit or loss 107,221 7,857 57,651 (3,710) Income tax on other comprehensive income (2,358) (10,915) (29) (3,930) Other comprehensive income for the period, net of tax 70,959 26,777 (24,918) 9,723 Total comprehensive income (120,450) (124,522) 31,282 59,601 of which: attributable to hybrid capital investors 18,006 3,000 6,105 2,082 of which: attributable to Air Berlin PLC shareholders (138,456) (127,522) 25,177 57,519 AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER

17 FINANCIAL STATEMENTS Air Berlin PLC CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED) as of 30 September /09/ /12/ Assets Non-current assets Intangible assets 407, ,798 Property, plant and equipment 204, ,176 Trade and other receivables 121,242 85,303 Deferred tax asset 15,000 16,835 Positive market value of derivatives Net defined benefit asset Deferred expenses 51,344 49,117 At equity investments 6,762 6,762 Non-current assets 807, ,708 Current assets Inventories 68,629 64,929 Trade and other receivables 388, ,483 Positive market value of derivatives 24,157 82,467 Deferred expenses 51,120 47,936 Assets held for sale 40, ,806 Cash and cash equivalents 317, ,229 Current assets 889, ,850 Total assets 1,696,666 1,863,558 AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER

18 FINANCIAL STATEMENTS Air Berlin PLC CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED) as of 30 September /09/ /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 (1,457,615) (1,248,200) Hedge accounting reserve, net of tax (83,739) (153,433) Foreign currency translation reserve 4,919 3,654 Remeasurement of the net defined benefit obligation (8,976) (8,976) Equity attributable to the shareholders of the Company (863,400) (724,944) Equity attributable to the hybrid capital investors 319, ,356 Total equity (544,038) (415,588) Non-current liabilities Interest-bearing liabilities due to aircraft financing 42,520 89,961 Interest-bearing liabilities 813, ,967 Provisions 5,883 6,095 Trade and other payables 53,365 37,201 Deferred tax liabilities 24,568 23,817 Negative market value of derivatives Non-current liabilities 939, ,134 Current liabilities Interest-bearing liabilities due to aircraft financing 35, ,758 Interest-bearing liabilities 212, ,714 Tax liabilities 3,197 3,266 Provisions 23,185 42,350 Trade and other payables 488, ,290 Negative market value of derivatives 114, ,548 Deferred income 18,241 19,654 Advanced payments received 404, ,432 Current liabilities 1,301,044 1,482,012 Total equity and liabilities 1,696,666 1,863,558 AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER

19 FINANCIAL STATEMENTS Air Berlin PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) for the period ended 30 September 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) Issue of hybrid capital 200, ,000 Total transactions with shareholders and hybrid capital investors 200, ,000 Loss for the period (154,299) (154,299) 3,000 (151,299) Other comprehensive income 26, ,776 26,776 Total comprehensive income (154,299) 26, (127,523) 3,000 (124,523) Balances at 30 September , , ,056 (1,016,474) 20,456 3,608 (3,188) (313,587) 203,000 (110,587) Balances at 31 December , , ,056 (1,248,200) (153,433) 3,654 (8,976) (724,944) 309,356 (415,588) Loss for the period (209,415) (209,415) 18,006 (191,409) Other comprehensive income 69,694 1,265 70,959 70,959 Distribution to hybrid capital investors 0 (8,000) (8,000) Total comprehensive income (209,415) 69,694 1,265 0 (138,456) 10,006 (128,450) Balances at 30 September , , ,056 (1,457,615) (83,739) 4,919 (8,976) (863,400) 319,362 (544,038) AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER

20 FINANCIAL STATEMENTS Air Berlin PLC CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) for the period ended 30 September /09/ /09/ Result for the period (191,409) (151,299) Adjustments to reconcile profit or loss to cash flows from operating activities: Depreciation and amortisation of non-current assets 35,834 53,177 Gain on disposal of non-current assets (35,359) (3,646) Increase in inventories (3,700) (8,865) Increase in trade accounts receivables (44,947) (64,600) Increase in other assets and prepaid expenses (28,106) (11,339) Deferred tax expense (benefit) 227 (10,167) Decrease in provisions (19,377) (11,163) Increase in trade accounts payable 47,545 24,134 Increase (Decrease) in other current liabilities 13,269 (21,677) Result on foreign exchange and derivatives, net 23,478 (23,432) Interest expense 67,629 69,867 Interest income (704) (4,124) Income tax expense 2,946 1,133 Shares in the profit of equity investments 0 (3) Other non-cash changes (823) 418 Cash generated from operations (133,497) (161,646) Interest paid (53,306) (57,458) Distribution to hybrid capital investors (8,000) 0 Interest received 578 1,714 Income taxes paid (2,852) (2,045) Net cash flows from operating activities (197,077) (219,435) Purchases of non-current assets (22,761) (18,153) Net advanced receipts for non-current items (5,800) 53,242 Loans given (8,000) 0 Proceeds from sale of tangible and intangible assets 280,186 37,537 Dividends from equity investments 0 3 Cash flow from investing activities 243,625 72,629 Principal payments on interest-bearing liabilities Drawdown of interest-bearing liabilities due to aircraft financing (214,136) (138,090) Proceeds from issue of interest-bearing liabilities 223, ,836 Transaction costs related to issue of interest-bearing liabilities (1,372) (10,326) Redemption of interest-bearing liabilities 0 (11,542) Proceeds from issue of hybrid capital 0 200,000 Cash flow from financing activities 8, ,878 Change in cash and cash equivalents 55, ,072 Cash and cash equivalents at beginning of period 259, ,006 Foreign exchange revaluation on cash balances 3,157 9,512 Cash and cash equivalents at end of period 317, ,590 thereof bank overdrafts used for cash management purposes (25) (49) thereof cash and cash equivalents in the statement of financial position 317, ,639 AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER

21 FINANCIAL STATEMENTS NOTES TO THE CONDENSED FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2015 (Euro/USD/CHF in thousands, except share data) 1. REPORTING ENTITY The consolidated interim financial statements of Air Berlin PLC for the nine months ended 30 September 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 10 November ACCOUNTING POLICIES AND CHANGES IN ACCOUNTING This interim report up to 30 September 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 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 30 September 2015 the Group had revenue of 4,105,535 (prior year: 4,114,268) and result for the period after tax of 416,782 (prior year: -333,493). Furthermore, for the twelve months ended 30 September 2015 the EBIT amounted to 273,345 (prior year: -265,709). AIRBERLIN INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER