Air Berlin, Germany's second largest airline, has filed for insolvency after its main shareholder, Etihad Airways, said 'no' to further financial support.
Air Berlin will continue to run services as the German government has arranged a loan through Kreditanstalt fuer Wiederaufbau which should see the company through until November at current bleed rates, or until it is broken up and sold off to the likes of Lufthansa, which has been waiting for just such an opportunity to by buy assets and routes on the cheap.
Air Berlin owes creditors €1.2 billion and has managed to lose €2.7 billion in the past six years.
A for the filing, "Under these circumstances, we work tirelessly to get the best for the company, the customers and the employees," Thomas Winkelmann, president of Air Berlin, said in a statement issued today, August 15th, 2017.
Loss-making Etihad bought 29% of Air Berlin in 2012 in an attempt to get more passengers through its Abu Dhabi hub. Etihad lost $1.87 billion in 2016, suggesting that its strategy might need tweaking.
Etihad threw in the towel with the German carrier and its two board members have resigned, with the message that, as the carrier’s trading was deteriorating at “an unprecedented pace,” there is no more money available to be thrown at the Air Berlin problem.
Lufthansa and a mystery second airline are in advanced rescue talks. The second airline could well be Ehtiad but easyJet also is in the frame, despite probable competition hurdles.
In typically blunt form, Ryanair said that Air Berlin is being set up to be sold off to Lufthansa even though the Irish carrier reckons this would breach German and European Union competition rules “while pushing up fares for consumers.”
Air Berlin is almost ‘asset free’ as nearly all of its aeroplanes are leased but its slots are worth money, having been carefully built up since Germany's reunification in 1990.
The company went public in 2006 but has been unable to keep up with the low-cost specialists and struggled to compete with German rival, Lufthansa.
TUI, Condor and Lufthansa’s Eurowings discount airline should all be delighted as Air Berlin's passenger start to look for alternative carriers.
The responsible union referred to today’s news as "a hard blow" and said that the priority from this moment on is "to save jobs."