A water heater including an inflow terminal for connecting a tankless water heater to a cold water supply and an outflow terminal for connecting the tankless water heater to a tap. A fluid channel proves a fluid connection from the inflow terminal to the outflow terminal. A heat element arrangement is arranged at or within at least a section of the fluid channel for transferring heat to fluid present within the fluid channel. An electronic controller is configured to control a heating power provided to the heat element arrangement. A flow sensor is arranged at or within the fluid channel downstream the heat element arrangement. The electronic controller is further configured to detect the presence of air bubbles within the fluid channel based on a change of a flow signal provided by the flow sensor and to adapt the heating power provided to the heat element arrangement in reaction to the determination of air bubbles.