Air Berlin said it is reconsidering major parts of its current strategy, as the airline was forced to issue a profit warning for the second time this year.

The airline's CEO, Joachim Hunold, said he is reviewing "the entire long-haul operation" and will make a decision on measures in the next three to four weeks.

The airline is faced with an additional 80 million euros in fuel costs this year. Thus, it had to withdraw its current guidance that would have seen the airline post a 70 to 120 million euro operating profit in 2008. Hunold still expects the airline to remain profitable, but does not stick a number to it.

Hunold said it was too early to say whether Air Berlin would cancel or defer aircraft orders. The airline has 34 Airbus A320s, 84 Boeing 737s and 25 787s on firm order. The 787s are to replace the existing fleet of its subsidiary LTU and cater for significant growth.

Air Berlin launched services to China last month with five frequencies each to Beijing and Shanghai. But Hunold said the current fuel prices, tightened visa requirements and the Tibet conflict have made China business extremely difficult.

"The entire China market is strongly retracting right now," he admitted. "It is almost impossible to get short-term bookings." Industry sources say Air Berlin's load factor on the two China routes has recently been as low as 40%. The airline reduced weekly frequencies to Shanghai from five to three and will decide on the Beijing operation within a month. Also under scrutiny are its North America routes and loss-making European markets.

Air Berlin's revenues in the first quarter grew by 4% to 654 million euros, but the airline managed to reduce its operating loss from 85 to 68 million euros.

Photo: Joe Walker