Air Berlin reduced its outlook for 2008 operating profit due to fuel costs, driving down its shares nearly 14 percent on Monday and springing another negative surprise on investors.
Germany's second-largest airline after Lufthansa now expects earnings before interest and tax of EUR73 million - EUR120 million euros (USD$115 million - USD$189 million), down from its forecast of EUR140 million - EUR160 million, Finance Chief Ulf Huettmeyer said.
His comments to a news conference came hours after management had briefed analysts on the outlook. German regulator BaFin said it was reviewing whether the company had properly fulfilled its obligations to disclose sensitive information.
Air Berlin, which this month said it had "cause for optimism" about 2008, had disappointed investors three weeks ago by unveiling weaker-than-expected 2007 results.
Including a one-off tax break, net profit shrank to EUR21 million from an adjusted EUR40.1 million the year before and operating profit fell by three quarters to EUR21.5 million as it struggled to integrate its acquisition of the LTU carrier.
"We are not satisfied with these results," Chief Executive Joachim Hunold told reporters. The company plans to save up to EUR100 million by cutting unprofitable routes and improving its marketing and fleet management.
Huettmeyer said Air Berlin had hedged three-quarters of its fuel needs for 2008 but the remaining 300,000 tonnes could weigh on results, depending on how energy prices develop.
Other European airlines have felt the pinch of crude oil prices that stay stubbornly above USD$100 per barrel.
British budget airline easyJet sparked a sell-off in European airline shares on March 19 when it warned record fuel costs would erode its 2008 profit if they did not fall soon.
But Lufthansa said on March 12 it expects operating profit to rise again this year and next as lucrative business travellers keep flying despite stuttering financial markets.
Lufthansa's fuel costs rose 15 percent to EUR3.86 billion last year, although the weak dollar and hedging helped relieve some of the pain.
This year the fuel bill was expected to rise to EUR4.9 billion, it said at the time.
Lufthansa said then it had hedged 83 percent of fuel needs for 2008, with hefty cost benefits over USD$75 a barrel.
