Bankrupt German carrier Air Berlin plans to fly its last revenue service on October 28, ending its efforts to continue operations while undergoing insolvency proceedings. The airline notified passengers of the decision on October 10, adding that all service on Austrian subsidiary Niki will continue. Niki has not filed for insolvency and has operated normal schedules since Air Berlin declared bankruptcy in August.
Air Berlin’s demise comes despite Lufthansa Airlines’ agreement to support restructuring efforts and Germany’s Federal Ministry of Economic Affairs and Energy’s pledge of a transitional loan of €150 million to allow operations to continue during administration proceedings.
Air Berlin declared insolvency on August 15, after failing to convince its main minority shareholder, Etihad Airways, to keep the German airline afloat with further funding. This past April Etihad injected a final €250 million into Air Berlin to support its most recent turnaround efforts. “However, Air Berlin’s business has deteriorated at an unprecedented pace, preventing it from overcoming its significant challenges and from implementing alternative strategic solutions,” said Etihad, which owned 29 percent of the German airline.
Air Berlin remains in talks with Lufthansa and EasyJet over the possible sale of parts of the business.
Air Berlin’s announcement comes just a little more than a week after the collapse of UK airline Monarch Airways, which, like its German competitor, struggled in recent years to turn a profit in the face of stiff competition from low-fare carriers, particularly in short-haul markets. Most recently, the airline had suffered from cost pressures resulting from a weaker pound following the so-called Brexit vote.
In October 2014, Monarch Airlines and other parts of UK leisure travel group Monarch Holdings completed a restructuring program and sale of 90 percent of the group to Greybull Capital under which it secured £125 million ($200 million) of permanent capital and liquidity facilities. Immediately after the deal closed, the UK Civil Aviation Authority renewed the group’s operating license.
Only a week after securing new ownership and the much-needed capital infusion, the airline finalized an order for 30 Boeing 737 Max 8s. The order, announced at the 2014 Farnborough International Airshow, included options for another fifteen 737 Max 8s and was to mark the beginning of the carrier’s transition to an all-Boeing single-aisle fleet.
Greybull assumed control of Monarch from the Mantegazza family after the former owners agreed to pay £30 million ($48 million) toward reducing the company’s substantial pension plan deficit. Other concessions came from employees, including an agreement to accept pay reductions of up to 30 percent and 700 “redundancies.”