German airline insolvency

Air Berlin cuts long-haul routes as offer deadline approaches

Air Berlin is rapidly scaling back its loss-making long-haul routes after a deadline of 15 September was fixed for takeover offers and potential new investors emerged for the insolvent airline.

August 31, 2017
Air Berlin is cutting long-haul flights from Berlin
Photo: Berliner Flughäfen/Günther Wicker

Amid daily losses of several million euros, Air Berlin is starting to cancel loss-making routes, according to German media reports this week. By the end of September the airline will stop flying from Berlin to most of its US destinations (Chicago, Los Angeles, San Francisco) but maintain flights to New York and Miami. It will also drop its Düsseldorf-Boston flights but maintain other long-haul routes from the largest airport in north-west Germany. Air Berlin operates long-haul routes with a fleet of 17 A330s.

In addition, Air Berlin will cancel its heavily loss-making twice-daily flights to Abu Dhabi that mostly operated as feeder services for shareholder and code-share partner Etihad Airways.

According to German media, Air Berlin has enough cash reserves until mid-September and will then need to call on the €150 million emergency loan provided by the German government to keep flying until a sale has been agreed.

The airline’s insolvency administrators have fixed a deadline of 15 September for offers for all or parts of the airline. The creditors’ committee will meet shortly afterwards to review the offers and probably to decide how to carve up the oversized group.

The number of known potential investors has grown over the last week after Niki Lauda said he was interested in buying back Niki, the Austria-based leisure airline that he founded and later sold to Air Berlin.

Apart from Lufthansa, which has already made an offer for Niki and Air Berlin’s long-haul routes, other possible buyers include Condor, Easyjet and aviation entrepreneur Hans Rudolf Wöhrl. Both Lauda and Wöhrl held meetings with the Air Berlin management this week.

However, Wöhrl’s investment company Intro announced today (August 31) that it would have preferred to take over the entire Air Berlin group in cooperation with Lufthansa but the latter had turned down this idea. It said it would no longer pursue its interest.

Meanwhile, Condor is apparently not only interested in acquiring a reported double-digit number of planes from Air Berlin but might even make an offer for the entire airline, according to the Bild-Zeitung. Air Berlin chief Thomas Winkelmann reportedly met Thomas Cook representatives, including Condor chief Ralf Teckentrup and group airline chief Christoph Debus, last week.

However, the intentions of TUI remain unclear. TUI CEO Fritz Joussen told journalists last weekend that the German tourism group is mostly interested in securing the jobs of the 700 crew who operate the 14 jets wet-leased to Air Berlin and which are now part of the Niki fleet.

Ryanair CEO Michael O’Leary has now backtracked from earlier comments that Europe’s largest budget airline might make a bid for Air Berlin. He claimed the Air Berlin insolvency was simply designed to enable Lufthansa to take over its smaller rival free of debts.

Separately, small charter airline Germania is taking legal action against the German government’s €150 million emergency aid for Air Berlin on the grounds that this has not been approved by the European Commission. Germania claims the aid is distorting competition by favouring Lufthansa. Ryanair had previously complained to German cartel authorities and the EU Commission over the state aid.

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