Air Berlin Files For Insolvency

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This news shocked me, as this airline seemed to have somewhat of a plan, and was even planning to launch flights to Hong Kong in a couple of months. That said, there’s been speculation that this was going to happen, so I guess it shouldn’t be surprising.

As of today, August 15th, German airline Air Berlin has filed for insolvency. The main catalyst of this is currently suggested to be that Etihad, Air Berlin’s biggest shareholder, has withdrawn their financial support.

img_5033airberlin Airbus A320 Zurich Airport

Air Berlin has had a rough past few years as they went up against strong, increasing competition from rival airline Lufthansa. They’ve gone through dozens of measures to prevent themselves from going bankrupt – they’ve been receiving funds from Etihad, as well as leasing out 38 planes to Lufthansa and their subsidiary Eurowings, though their financial situation has still been going downhill.

an airplane on the runwayLeasing planes to Eurowings hasn’t helped solve Air Berlin’s financial issues

As far as I know it will probably be over for them soon, unless Lufthansa decides to take over the airline. Per Bloomberg:

Air Berlin Plc filed for insolvency proceedings after main shareholder Etihad Airways PJSC withdrew its financial support.

The discount carrier and subsidiaries submitted the filing in a local Berlin court, though it won’t seek bankruptcy protection for its Niki Luftfahrt GmbH and Leisure Cargo GmbH units, Air Berlin said in a statement. Talks with Deutsche Lufthansa AG and other parties regarding disposals are continuing, it said.

Air Berlin has been restructuring in an effort to stem years of losses, including leasing part of its fleet to Lufthansa. Plans to merge Niki with TUI AG’s German airline arm fell apart in June after Abu Dhabi-based Etihad said it failed to reach a deal on forming a joint venture for the operation.

(Update: It seems like the German government may give Air Berlin an emergency loan so they can sort themselves out in time. If they cannot sort themselves out with the loan, though, they’ll truly go out of business.)

Bottom Line

On one hand the public saw this coming, though it’s sad that Air Berlin hasn’t managed to keep up with their finances. Obviously they’re known for pretty terrible seat pitch in economy (speaking of customer experience, you should probably contact Air Berlin now if you’re booked on them in the future), so we’re not losing much in terms of customer experience. At this point, all we can do is sit and wait for the situation to unfold, and see if they hit any luck with a major turnaround, such as a full takeover by Lufthansa. But with their track record, this seems unlikely.

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