Airberlin insolvent, Etihad exits

Airberlin insolvent, Etihad exits

Airberlin filed for insolvency yesterday after Etihad withdrew financial backing. It is in talks with partners to acquire parts of its business.

Germany’s second largest carrier filed the bankruptcy protection request yesterday at the local court of Berlin-Charlottenburg.

Lufthansa and the German government are supporting airberlin’s restructuring efforts. Lufthansa is considering taking over parts of airberlin group while the government has issued an Eu150 million ($176 million) bridging loan to maintain flight operations.

Airberlin said that flights will be unaffected by the insolvency. Customers can still book upcoming flights and flight schedules and existing bookings will remain unchanged. Aircraft operated by airberlin on wetlease agreements with Eurowings and Austrian Airlines will be flying as normal.

Thomas Winkelmann, CEO of airberlin said: “We are working tirelessly to achieve the best possible outcome for the company, our customers and employees, given the situation.”

 

Etihad Exits

Etihad bought 29.21% of airberlin’s stake in 2011 and provided Eu250 million funding in April to keep operations running.

Etihad released a statement saying: “This development is extremely disappointing for all parties, especially as Etihad has provided extensive support to airberlin for its previous liquidity challenges and restructuring efforts over the past six years.”

The Gulf airline withdrew financial support for airberlin following a lacklustre financial performance last year. It saw a 117.3% drop in EBIT and a 10% drop in flight revenues.

Etihad continued: “Airberlin’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. We remain open to helping find a commercially viable solution for all parties.”

The Gulf airline was in talks to merge airberlin’s Austrian subsidiary Niki with TUIfly but the deal fell through earlier this year.

This all comes off the back of Alitalia filing for bankruptcy protection earlier this year. Etihad bought a 49% stake in the airline in 2014. Since its insolvency, Etihad has been reviewing its European investment strategy.

 

Fleet plans

Airberlin currently operates a fleet of 72 aircraft, comprising 44 Airbus A320s, 17 A330s and ten Boeing 737NGs.

AerCap, Aircastle, FLY Leasing and Air Lease are the main public lessors leasing planes to airberlin. AerCap are leasing 10 A330s.

Wells Fargo senior analyst Gary S. Leibowitz commented: “it is doubtful that AerCap was too surprised by this announcement, and we suspect probably ‘shadow­marketed’ many of these planes already”.

“Several of these planes could remain in service (Air Berlin’s flights will continue) and Lufthansa already has stated it is looking to take over parts of the Air Berlin Group; and Ascend’s estimated AerCap exposure could be overstated since the lessor has been selling a lot of planes YTD, and often there is a lag before transactions appear in the database.”

Alex Baldwin
By Alex Baldwin August 17, 2017 09:38