Air Berlin confirmed it has filed for insolvency proceedings after its main shareholder Etihad Airways said it “would not provide any further financial support”.
Air Berlin said it was in talks with Lufthansa over the German airline buying parts of its business. It also said its flights were continuing and the German government was supporting it with a bridge loan.
Ryanair have lodged a complaint with the German and EU competition authorities to block a Lufthansa take over of Air Berlin. Germany;s General Election is due on September 24.
Air Berlin is Germany’s second-largest airline, after Lufthansa, and Europe’s seventh-largest airline in terms of passengers carried. It operates a fleet of 121 aircraft including 100 A320 family, 13 B737, 20 Dash-8 Q400 and maintains hubs at Berlin Tegel Airport and Düsseldorf Airport and operates a route network from 12 German cities and some European and intercontinental services. Twelve of the aircraft are leased from Alec Burger and Diarmuid Hogan, four from Gus Kelly and three from Domhnal Slattery. It has four major segments: long-haul, mainly transatlantic from Dusseldorf and Berlin (17 A330), business routes within Germany and intra-Europe routes feeding its own long-haul and Lufthansa and leisure routes from German-speaking countries, wet-leasing to Lufthansa/Eurowings.
German Economy Minister Brigitte Zypries said the €150m government bridging loan for insolvent Air Berlin would secure the positions of the airline’s 7,200 employees in Germany and should be enough to ensure flights for three months and loans would be paid back from proceeds of asset sales. “We assume that Air Berlin’s airport slots… can be marketed and sold and we assume that the loan can be paid back,” she told journalists during a news conference.
German Transport Minister Alexander Dobrindt said he does not expect the likely sale of parts of Air Berlin to Lufthansa and to other airlines to cause cartel problems. “There is no transfer of Air Berlin as a whole to Lufthansa, there are parts of the business that will go to Lufthansa and there are interested parties for other bits of the business so we do not expect cartel difficulties
Expressing disappointing over the move, Etihad Airways, headed by Wicklow born Ray Callely, which owns nearly 30pc of Air Berlin, said: “This development is extremely disappointing for all parties, especially as Etihad has provided extensive support to airberlin for its previous liquidity challenges and restructuring efforts over the past six years.” It added that in April this year, Etihad provided “€250m of additional funding” to airberlin as well as supporting the airline to explore strategic options for the business. However, airberlin’s business has deteriorated at an unprecedented pace, preventing it from overcoming its significant challenges and from implementing alternative strategic solutions. Under these circumstances, as a minority shareholder, Etihad cannot offer funding that would further increase our financial exposure. We remain open to helping find a commercially viable solution for all parties,”.
- Gulf news report here.
- Ryanair statement here.
- Reuters Brigitte Zypries report here.
- Reuters Alexander Dobrindt report here.
- Bloomberg report here.