Struggling Air Berlin refuses to apply for government guarantee
Despite all the financial problems, which the second largest Germany’s airline has faced in the previous years, as well as consideration to apply for a government guarantee, Air Berlin decided that such measure is not needed.
‘We had made a preliminary application for a surety as part of management’s pre-emptive strategy of investigating all restructuring options for Air Berlin. However, we have at no point made a binding application for a surety, and will not do so,’ said the company’s CEO Thomas Winkelmann.
Air Berlin asserts that such actions were motivated by a successfully ongoing progress of the company’s reconstruction. Thanks to lowering of operating expenses as well as favorable renegotiations like those for aircraft leasing contracts, the company has already achieved cost savings for 2018 ranging in double-digit amount of millions of Euros. ‘There is quite simply no longer any need for a government guarantee to secure any loans,’ claimed Winkelmann.
In 2016 Air Berlin’s financial loss was estimated to be $877 million and, since then continuing to deepen, it might now be around $1.34 billion. The financial situation is worsened by recent flight cancelations and delays in the beginning of June. Now that the government guarantee is rejected, either a spectacular reconstruction or new partners could help Air Berlin get back on feet.
Another possible “helping-hand” was seen in Lufthansa. Air Berlin’s rival and the largest German carrier was naturally seen as a possible partner, especially as it had bought 38 aircraft in 2016. But after having talks about salvaging the remaining Air Berlin’s business with Abu Dhabi authorities, even Lufthansa had to admit – the debt is just too big.
As one of Europe’s largest network airlines, Air Berlin focuses on domestic flights and on services between a number of major European cities and its Berlin-Tegel and Dusseldorf hubs, from where the airline also operates long-haul flights to the US, Caribbean and Middle East. The company carried approximately 28.9 million passengers in 2016.
Source – AeroTime