Air Berlin says it may cancel its order for 25 Boeing 787s. Delays in the program are “everything but satisfactory,” CFO Ulf Huettmeyer says. “It’s no fun anymore.”

Germany’s second-largest airline plans to make a decision in the next few months. The decision will be based not only on the program status, but also on its own long-haul strategy. The airline operates a total of 13 Airbus A330s that it originally planned to replace with 787s when it ordered the type in 2007. But it has since drastically scaled down its long-haul services after its strategy to revert to a more business traveler-oriented model failed and it was forced to close down new China routes.

Also, Air Berlin finds itself in the middle of a dispute over future pay with pilots at its subsidiary LTU, which operates the long-haul services.

Air Berlin officials say that given the 787 program delays, the airline can easily cancel the order, which was announced on the eve of the 787 roll-out on July 7, 2007. One alternative option considered is to sell the delivery slots to another operator once demand for the type resurges and economic conditions improve.

The airline is meanwhile looking at further cuts to its long-haul network and may also reduce capacity on domestic routes to continue its revised strategy of targeting higher yields, rather than volumes.

In the second quarter, revenues were down 3.8% at €836 million, but the company managed to improve its operating profit by 33%, reaching €17.6 million. CEO Joachim Hunold said he still aims at a higher operating profit for fiscal 2009, compared to last year.

Separately, the airline called off the planned sale of its freight subsidiary, Leisure Cargo. Offers for the unit came in too low, and the company now is waiting for market conditions to improve. Nonetheless, Air Berlin is looking at selling more of its Boeing 737NGs to Asia as part of its push to control capacity.

Photo: Boeing