European Commission Keeps Air Berlin Flying
Joe Cortez September 06, 2017
Government approves $179 million bailout for bankrupted air carrier.
Air Berlin will continue to fly over European skies, but for how long and under what brand is yet to be determined. In a statement, the European Commission confirmed the $179 million bailout package for the airline to temporarily continue operations.
“The government’s timely support has made a decisive contribution towards Air Berlin being able to continue flight operations despite having begun insolvency proceedings,” the airline wrote in a press release. “From the very beginning of these negotiations, we have placed great importance on retaining as many jobs as possible.”
The bailout loan will allow flyers holding reservations aboard the carrier to keep their plans while supporting over 8,000 remaining employees. The loan will be distributed in installments, under the condition that no liquidity remains from the previous installment and the German government guarantees the loan.
“The Commission found that the measure will help to protect the interests of air passengers and to maintain air passenger services,” the commission wrote in a statement. “At the same time, the strict conditions attached to the loan, its short duration and the fact that Air Berlin is expected to cease operations at the end of the process, will reduce to a minimum the distortion of competition potentially triggered by the state support.”
As the airline continues operations, bidders are beginning to line up for a piece of the broken carrier. Reuters reports several European airlines, including EasyJet, Lufthansa and Thomas Cook Airlines, have expressed interest in bidding on portions of the carrier. Former Formula One champion Niki Lauda is reported to be interested in buying back the subsidiary he started before selling to Airberlin, while International Airlines Group could be interested in purchasing leftover Airbus A320 and A330 aircraft.
Analysts expect the loan to run through November 2017. With Lufthansa pledging their support, many expect the German flag carrier to take a majority stake of the carrier and their routes.
[Photo: Shutterstock]
This is neither a "bailout package" nor a "subsidy" - it's an emergency loan that has to be repaid and comes with pretty strict conditions. It ensures (somewhat) orderly operations while they are conducting a bidding process to sell the airline or its parts. Without it, airberlin would have to stop flying immediately, leaving thousands of passengers stranded, 8,000 people unemployed and what's left of the airline with less/no value... ...and nobody expects LH to "take a majority stake" - LH wants them cut up and is bidding for pieces. The last thing they want is for airberlin to continue operating...
Right, all while complaining the ME3 gets government subsidies. Aren't they arguing for letting the airlines stand on their own merits instead of being propped up by governments?
Hope Lufthansa follows through on this. Would be great to see long haul flights on LH to Berlin.