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Air Berlin has declared bankruptcy

Air Berlin has declared bankruptcy

2017 08 15

2017 08 15

The financial disaster is perfect: After years of losses the airline Air Berlin is insolvent. With a credit of more than 150 million euros, the Confederation wants to secure the flight operation at least for the next three months.

 

 

Air Berlin has filed an application for insolvency. After major shareholder Etihad had declared that no further financial support was available, it was concluded that "there is no longer a positive progress forecast," said Germany's second-largest airline on Tuesday.

The insolvency proceedings are to take place in self-administration. According to Air Berlin, the flight operations are being continued. The federal government supported the airline with a transitional credit of more than 150 million euros. He assured the flight operation of the insolvent airline for about three months, said Federal Minister of Economics Brigitte Zypries (SPD) in an initial statement.

At the same time, Zypries was confident that Lufthansa would be able to take over parts of Air Berlin. The credit creates a framework for the transition. However, Zypries concluded that the federal government would be able to take over debt from Air Berlin to allow for a takeover. When asked about any further federal loans, she said that this question would be decided when it was time.

Air Berlin has been reporting losses almost continuously since 2008. Only in 2012 there had been a small profit, after one had sold its own frequent flyer program to the major shareholder Etihad. In 2016, Air Berlin recorded a record loss of more than EUR 780 million. Together with the loss carryforwards of the past years, a debt mountain of around 1.2 billion euros has accumulated in this way.

Lastly, the passengers had also felt the dramatic position of the airline more and more clearly. Since the changeover to the summer schedule at the end of March, delays and flight failures have accumulated. As a result, the passengers also stayed away: during the July holiday month, their number declined by 24 percent compared to the previous year.

But even the most important shareholder Etihad had kept Air Berlin alive. The Arab airline has a good 29 per cent in the company since 2011 - and had actually promised to pay for Air Berlin for the time being. At least until a different solution for the problem with the unfortunate investment in Germany should be found.

Now Etihad pulled the tug. On Wednesday the Arab partner, according to data from business trips, did not meet an agreed credit of 50 million euros. Two days later, the Berliners were then internally announced the support. On Tuesday, the major shareholder noted the recent development as "extremely disappointing for all stakeholders, especially as Etihad has provided substantial financial support for Air Berlin during previous six months of liquidity crisis and for its recovery efforts."

It was only in April that Etihad had a further 250 million euros. "Air Berlin's business has deteriorated at an unprecedented rate," the company continued. As a minority shareholder, Etihad could not contribute any further money and thus increase its own risk.

"We are very worried about the jobs of the employees," the union Ver.di said. "Our priority now is to secure the jobs," said Federal Commissioner Christine Behle. In the process of insolvency, transparency and involvement of trade unions in the further planning would be necessary.
 

Talks with Lufthansa are already underway

Lufthansa could at least take over parts of the insolvent company. Corresponding talks have already begun, according to a communication from the market leader. "Lufthansa intends to lead these negotiations to a fast and positive result". This also offers "the opportunity to recruit staff".

Even in the past Lufthansa had signaled interest in buying Air Berlin, but did not want to bear the immense debt burden. Lufthansa has already leased airplanes from Air Berlin, which fly Eurowings and Austrian Airlines for its subsidiaries

The Air Berlin share , which has only been traded for cent years , was suspended from trading in the early afternoon. Lastly, it was 1.81 percent in the minus at 0.76 euros. Lufthansa's share , on the other hand, rose by 1.96 percent to EUR 20.45.

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