Air Berlin files for bankruptcy

Air Berlin announced yesterday that it had filed bankruptcy to commence liquidation under self-administration at the local District Court of Berlin-Charlottenburg.

Air Berlin stated that the Federal German Government, Lufthansa and other partners are supporting them in their restructuring efforts. The Federal Government is supporting Air Berlin with a bridging loan of approximately $176M in order to allow them to continue flying its schedules.

So what now?

If you currently have tickets or were planning on traveling with them, there is no need to panic as they have stated that:
• All flights operated by Air Berlin and NIKI will continue as planned
• The flight schedule remains valid
• Bookings remain valid
• All flights can still be booked

What caused this?

Air Berlin is Germany’s second largest airline but closed 2016 with a loss of $915M.  This decision comes after Etihad Airways who owns 30% of the airline, decided to stop providing financial support. Etihad’s most recent investment was $292M in April 2017.

Bottom-line

Lufthansa and other partners which includes EasyJet are in negotiations with the airline regarding the acquisition of business units.  I believe the airline will either be dismantled and sold off in segments or one airline will take over the operations which in my opinion is the most likely outcome.

If Lufthansa does acquire Air Berlin as a whole, it would cement its leading market position in Germany.

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