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EU Airlines Swarm Over A Bankrupt Air Berlin

Fri, 08/18/2017
Will Lufthansa take over Air Berlin?

Germany´s second largest airline, Air Berlin has gone bankrupt.

On 15th August 2017 Air Berlin airline filed for insolvency at Berlin-Charlottenburg Local District Court after it lost financial support from Etihad Airways, whose strategy in taking stakes in smaller, struggling airlines for the last few years is being reviewed. Etihad has been the main shareholder for the Berlin-based airline since 2011.

As Air Berlin goes into administration, other airlines have been in talks to take it over. Lufthansa could swoop in and take over most of its failing competitor, or EasyJet, also speculated to be a potential buyer, might spread its wings in Germany EasyJet’s spokesperson, however, has not yet commented on the rumours. The likelihood that EasyJet could manage a full takeover is quite slim, seeing as the airbus fleet of Air Berlin is already similar in size to that of EasyJet, plus the failing German airline has an additional one hundred high-cost Boeing planes.

Last year, losses of 782 million Euros made by Air Berlin were described by their main stakeholder Etihad (which until this week owned near 30%) as “extremely disappointing”. The airline based in Abu Dhabi had just invested 250 million Euros in April 2017, until they finally announced enough was enough. Speaking to the guardian, the airline spokesman said, “Air Berlin’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.”

After years of financial struggles, the airline is expected to continue with the aid of a loan of 150million euros from the German government.  This support will allow its 7,200 employees to keep their jobs while the airline restructures or decides to sell the company.

Across the channel, Ryanair described the German government loan as ´obvious conspiracy´ to allow Lufthansa to acquire Air Berlin debt-free. The Irish Airline also pointed out that Lufthansa will take over Air Berlin would breach both German and EU competition rules. A Lufthansa monopoly would not only stop competitors from expanding but mean German customers will face higher ticket prices.


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