Interview with Air Berlin's CEO: Airport Opening Delay 'A Huge Embarrassment'

In a SPIEGEL interview, Hartmut Mehdorn, 69, CEO of Germany's second-largest airline Air Berlin, discusses how the surprise delay in opening the capital's new international airport will affect the company. He also describes widespread financial difficulties among airlines as an "industry crisis."

SPIEGEL: Mr. Mehdorn, last week brought the surprise announcement that Berlin's new international airport will not be able to open on schedule on June 3. When did you find out about the debacle surrounding the prestige project?

Mehdorn: On Tuesday morning at 11 a.m. from the media.

SPIEGEL: Seriously? We would have thought that the CEO of a major airline like Air Berlin would have been informed earlier.

Mehdorn: I would have thought so, too -- and that's one of the gripes that we now have about the way that the entire project has been undertaken. Back when I was the head of Germany's national railway, Deutsche Bahn, we managed to open the new Berlin central station in time for the 2006 World Cup soccer tournament. At the time, if anybody wanted to postpone a deadline, they had to run it by me. The complexity of that project was at least as great as what we're now seeing with the Berlin Brandenburg Airport Willy Brandt (BER).

SPIEGEL: How did you react?

Mehdorn: We were, of course, surprised and disappointed. But we couldn't even react because, not surprisingly, no one working for the airport operator was answering the phone.

SPIEGEL: The construction project had already run into problems -- first with the check-in, then with the baggage. Did you ever suspect that it could all get out of hand?

Mehdorn: No, we were always assured that everything was going smoothly. On the Friday before the opening date was delayed, we were on site with a group of managers. It all admittedly still looked rather messy in the terminal, but anyone who walks through the halls of a trade show the day before the opening can't imagine that everything will be finished overnight, either.

SPIEGEL: An international airport is far more complex than a tourism trade fair.

Mehdorn: Absolutely, for me such a project is primarily a gigantic IT package. Does every suitcase know where it has to go? Do the flight information displays work? And so on. For months now, we've broached these issues again and again with the experts, but the airport operator reassured us. Everything has to be electronically tested, section by section, before the entire orchestra can perform. The general rehearsal reportedly took place on May 8 and, as far as we know, it went well ...

SPIEGEL: ... on the day that the delay was announced, the argument given was, of all things, that there were problems with fire safety.

Mehdorn: On Monday afternoon, there was a meeting at which airport head Rainer Schwarz said for the first time that he was struggling with difficulties in this area. But it didn't sound particularly ominous.

SPIEGEL: How can they notice that there's inadequate fire safety only three weeks before the opening of such a building?

Mehdorn: I don't understand it either, especially since at an airport like this, aside from the cutting board in the restaurant kitchen, due to the building code regulations there's actually nothing that can burn. It's a huge embarrassment for Berlin and the whole world is laughing at us now.

SPIEGEL: Even your new co-owner from Abu Dhabi, Etihad Airways, which has a 29 percent stake in Air Berlin?

Mehdorn: They're just shaking their heads like everyone else.

SPIEGEL: When do you think the new opening date will be?

Mehdorn: The third quarter is the high season for every airline. It wouldn't make sense to switch airports during such a period. If it can't be managed before the summer holidays, it will have to be afterwards. The launch of the winter flight plan in late October would be a good time. We at Air Berlin are planning on handling most of our traffic here, and expanding the new airport in the German capital into a bona fide hub with short transfer times.

SPIEGEL: What is this delay costing your company?

Mehdorn: We've already sold 1.3 million tickets for the new airport. It's now necessary to write to all of these customers to inform them that they will have to fly from Berlin's Tegel Airport. And we shouldn't forget that for many years, no investments have been made in Tegel Airport or its baggage system. It has failed to meet modern standards for quite some time now, but we'll have to live with it longer than we thought. And just imagine the mood among the staff there. Many service contracts were due to run out in June. Now, we'll have to find a way to retain employees there for a few extra months. What's more, we need a few hundred strong helpers for the baggage transport.

SPIEGEL: The financial losses for Air Berlin must be enormous.

Mehdorn: We can't comment on that for the time being, but we'll engage in the necessary dialogue with the airport. Just one example -- our fuel farm at Tegel is gradually being emptied by our jets, while the one at the new airport is filled to the brim -- but we can't just truck the jet fuel through the city. There's an urgent need for action on many fronts. No one has covered himself with glory here.

SPIEGEL: And what will happen next?

Mehdorn: Above all, we intend to have a say in the new opening date and to be regularly informed. We can't allow anything else to go wrong. There's one thing that I'll react strongly to -- if things come at the expense of our customers.

SPIEGEL: Air Berlin already has a dismal balance sheet, with high losses, growing debt and dwindling capital reserves.

Mehdorn: The year 2011 was marred by over €220 million ($284 million) in higher fuel costs and an absurd new aviation tax that was completely arbitrarily introduced by the German government, and which burdened us with an additional €165 million, with no chance of transferring these costs to our customers.

SPIEGEL: You're diverting attention away from the strategic mistakes that were made by Air Berlin.

Mehdorn: I have no such intention. Of course, everyone is wiser in hindsight and sees certain things differently.

SPIEGEL: Which explains why Air Berlin founder Joachim Hunold had to be replaced by you.

Mehdorn: Achim Hunold stepped down of his own accord to make way for a new management with new areas of focus. Since then, Air Berlin has done its homework. We've launched an efficiency improvement program, gained a strategic partner with Etihad Airways, and created a worldwide flight network for our passengers by joining the global Oneworld airline alliance. We are currently hanging on the pull-up bar, and have to do everything we can to get our chin back over it again. Such a tour de force is sometimes painful. Since Air Berlin is lean, this can be achieved. I'm confident that we'll be back in the black in 2013.

SPIEGEL: Before you took your current position, you were on the supervisory board of Air Berlin, where you monitored Hunold. Did you let too many things slip through?

Mehdorn: In a company, it's the CEO who runs the business, and the supervisory board can only provide constructive feedback. This is what we did. I'm not interested in the blame game, but rather in the facts of the matter -- here as well.

SPIEGEL: Now, Hunold is on the supervisory board and monitoring you. That's absurd.

Mehdorn: You can't forget that he built up this airline, that he knows the market and the sector, and that we can benefit from his expertise. I'm not looking back; instead, I'm focusing on ensuring that Air Berlin is professionally industrialized and soon making money again. I'm endeavoring to take all members of my supervisory board along for this.

SPIEGEL: It caused an uproar when you eliminated the special conditions for all of Hunold's buddies, who were able to travel free of charge.

Mehdorn: Hunold used to seek out celebrities who traveled as brand ambassadors for Air Berlin. The days of such marketing campaigns are over for a number of reasons.

SPIEGEL: Have none of Hunold's friends complained that they now have to pay for their tickets?

Mehdorn: Not to me. It would have been easy for me to explain my point of view. Air Berlin has to save money and recover financially.

SPIEGEL: You are the CEO, yet you drive a Mini without a chauffeur, while Hunold has a significantly more expensive company car.

Mehdorn: My goodness, he's the founder of this company. Can't someone like that be a bit more equal than others? And one more thing: Air Berlin fulfills existing contracts.

SPIEGEL: Which explains why he received a golden handshake worth over €4 million?

Mehdorn: That may seem high to some, but it's the amount that he's contractually entitled to.

SPIEGEL: Air Berlin is not the only airline that's hit some heavy turbulence. Air France/KLM, for instance, is also in serious financial trouble, and Malév and Spanair have already gone bankrupt. Even Lufthansa has introduced a drastic cost-cutting program.

Mehdorn: We're experiencing an industry crisis. Lufthansa is simply taking a different approach than we are. We're taking a more low-key approach. But to avoid any misunderstandings here -- Lufthansa is not our enemy, but rather a competitor in the market. They command my deep respect, even if we're each heading in our own directions and we don't want to copy them.

SPIEGEL: What kind of relationship do you have with Lufthansa CEO Christoph Franz?

Mehdorn: A good one. After all, we are both members of diverse international industry organizations. We work well together.

SPIEGEL: You're going to turn 70 in July. How long do you want to remain the CEO of Air Berlin?

Mehdorn: When I started, it was clear to the supervisory board that it doesn't make sense to hire somebody for only half a year. And I make no secret of the fact that I enjoy my job here. I don't see any point in attaching a date to my name. That would only create a sense of unease within the company. When we've found a suitable successor, I will show him the ropes and take my leave. The main thing is that he or she has Air Berlin's best interests at heart.

INTERVIEW CONDUCTED BY DINAH DECKSTEIN AND THOMAS TUMA

Translated from the German by Paul Cohen

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