Germanwings


Germanwings

 

 

Tail fin of Germanwings (graphics)

 

 

2009

Change in %

Further information on Germanwings can be found at www.germanwings.com.

Revenue

€m

580

–7.6

Operating result

€m

24

300.0

EBITDA

€m

63

61.4

Passengers carried

thousands

7,166

–6.0

Employees as of 31.12.

number

1,111

6.2

Successfully established in the no-frills segment

In recent years Germanwings has established a successful presence in the segment of no-frills airlines in Europe. With its current fleet of 26 Airbus A319s Germanwings offers flights from its five locations, Cologne/Bonn, Stuttgart, Berlin-Schönefeld, Hamburg and Dortmund, to 65 destinations on the European continent. In order to ensure its long-term competitiveness, the company restructured its network in late 2008 and reduced the fleet by five Airbus A319s. Although the air transport sector has been severely shaken by the global recession, Germanwings was able to grasp available opportunities, benefiting among other things from the shift in business travellers’ booking patterns. In the spring of 2009 the company therefore integrated two new Airbus A319s into its fleet and leased additional capacity for the summer. From the autumn, the site in Cologne/Bonn in particular was expanded and new destinations included in the flight plan.

The competitive environment on the German market nevertheless grew even harsher for Germanwings in 2009. Air Berlin took over the city connections from TUIFly from 1 November 2009, for instance. This added to the competition for Germanwings, above all at its main sites in Cologne/Bonn and Stuttgart.

The main focus of sales activities is on online channels, which account for 92 per cent of all sales. The most important is its own website www.germanwings.com. In addition, cost-neutral market penetration is increasingly being achieved via online and offline B2B channels with the aim of gaining better access to high-revenue customer groups (companies, event organisers etc).

Germanwings’ outstanding punctuality and high product quality mean that surveys regularly reveal a high level of customer satisfaction. Since commencing operations Germanwings has been able to refine its product and set trends. Seat reservations are now an firm feature of special service requests and the baggage charge introduced in Germany in 2008 has now been copied by established airlines too. All-in pricing was introduced from October 2009, by which fuel surcharges as well as other charges are included in the ticket price. The range of transfer connections on offer at larger airports is becoming ever more popular with customers and is successful in smoothing the seasonality in the Germanwings route portfolio.

Earnings improve with planned reduction in revenue

Although the air transport industry as a whole was hard hit by the global economic and financial crisis in 2009, Germanwings was one of the companies to benefit from it. Its quality image means that Germanwings has the right offer for business customers who no longer fly Business Class.

Revenue fell in 2009 compared with the previous year to EUR 580m. This decline was planned in the sense that it was largely in line with a reduction in available seat-kilometres, which was due in turn to an early restructuring of the network and a reduction of the fleet by five Airbus A319s. Passenger numbers contracted to 7.2 million for the full year (previous year: 7.6 million). The passenger load factor almost stayed at last year’s level, reaching nearly 80 per cent. Overall, Germanwings generated a positive operating result of EUR 23.9m for the financial year 2009. This was a clear improvement on the previous year, which was adversely affected by non-recurring factors.

Well positioned for 2010

Germanwings expects pressure on demand for and income from air traffic to remain high in 2010. The market offers little chance of imposing price increases if demand softens. Overcapacities must still be expected as a large number of past aircraft orders are due for delivery in 2010. Rising oil prices and price increases announced by suppliers will also increase pressure on costs. Opportunities arise primarily from the fact that Germanwings constantly refines and successfully implements product innovations, which contributes to stabilising average yields. These steps are part of an extensive programme to safeguard earnings that is focussed not on conventional cost-cutting but on improving processes and structures.

Germanwings is again anticipating an increase in revenue and an operating profit for 2010. The forecast fuel and exchange rate assumptions could nevertheless have a negative effect in the short term.

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