Airberlin, a European focused carrier is insolvent and might be filing for bankruptcy.
Airberlin’s problem came to its climax after Etihad Airways stopped funding the airline after it continued to post further losses.
Berlin Tegel and Duesseldorf, the airline’s main routes might be taking over by Deutsche Lufthansa AG, its rival in the country through its Eurowings subsidiary.
On Tuesday, Airberlin announced that it has filed for insolvency proceedings under self-administration at the local District Court (Amtsgericht) of Berlin-Charlottenburg, in order to continue with the restructuring process that is already underway.
The company said in the statement that, the Federal German Government, Lufthansa and other partners are supporting airberlin in its restructuring efforts. The Federal Government is supporting airberlin with a bridging loan to maintain flight operations for the long-term.
· All flights operated by airberlin and NIKI will continue as planned
· The flight schedule remains valid
· Bookings remain valid
· All flights can still be booked
Negotiations with Lufthansa and other partners regarding the acquisition of business units of airberlin are far advanced and highly promising. These negotiations may be finalised shortly.
Thomas Winkelmann, CEO of airberlin: “We are working tirelessly to achieve the best possible outcome for the company, our customers and employees, given the situation.”
The background of today’s announcement is the notification by Etihad that it no longer intends to provide airberlin with financial support.
There are strong indications that Lufthansa will make good its plan to take over key parts of the business. The deal might see Eurowings having a monopoly of the German market.
German authorities have already extended EUR150 million loan to Airberlin to enable the airline to keep flying to save nearly 7,000 jobs in the country. As the days go by, Lufthansa’s plans are expected to unfold.
However, Ryanair, another European carrier said Lufthansa is trying all its best to ensure it takes over Airberlin. The airline alleged in a statement that:
“This manufactured insolvency is clearly being set up to allow Lufthansa to take over a debt-free Air Berlin, which will be in breach of all known German and EU competition rules.”
Lufthansa is expected to refute Ryanair’s accusations. In its own statement, the airline said:
“In order to continue with its restructuring, airberlin has filed a provisional insolvency proceeding in self-administration at the local court of Berlin-Charlottenburg today. Lufthansa is supporting the restructuring efforts of the airline jointly with the German Government”.
There are no facts given by Ryanair, but the debacle of Airberlin has been a curious case for a typical European carrier. Since 2008, the airline has continued to post losses. As at the end of 2016, the airline posted EUR782 million in net losses. A beleaguered Etihad had no option than to withdraw its funding after another EUR250 million provided in April could not save Airberlin.
One year ago, the airline was valued at EUR1 billion, today, Airberlin is now valued at EUR60 million after its shares tanked by 34% to less than EUR1.