Air Berlin, Germany’s Second-Largest Airline, Goes Bankrupt
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Over the last few months, a couple of notable airlines have made news by declaring bankruptcy (Alitalia) or getting dangerously close to bankruptcy (South African Airways). Tuesday, we learned that yet another airline is on the brink: Air Berlin. The German carrier’s bankruptcy comes after the cash-strapped Air Berlin was denied additional funding by part-owner Etihad Airways, which provided 250 million euros (US$294 million) to keep the airline afloat just a few months ago.
In order to keep operations going in the short run, the German government quickly announced that it would be providing a loan of 150 million euros (US$176 million). This funding is expected to keep the airline operating for three months. So, you’re going to want to book a trip soon, especially if you want to take advantage of the Amex Offer of 20,000 Membership Rewards for spending $1,000 with Air Berlin.
We’ve known for a while that Air Berlin wasn’t doing well. It has struggled to differentiate itself in a crowded aviation industry. Would it try to cut costs and structure as a low-cost carrier to avoid competing head-to-head with Germany’s flag carrier Lufthansa? Or, would it act as a full-service carrier as a fellow member of the Oneworld alliance? Its identity struggle has persisted for years.
This marks another black-eye for Etihad Airways. The Abu Dhabi-based carrier has invested heavily in two money-losing European airlines, with a 49% stake in Alitalia and 29% in Air Berlin. These two cash-draining mistakes are a large part of the reason that Etihad’s former CEO James Hogan no longer holds his position at the helm of the Middle Eastern airline.
There’s no word yet on what the airline’s bankruptcy will mean for the Air Berlin TopBonus mileage program. Currently, the program is in the midst of a devaluation — with sweet spots open for flights booked until the end of August. For now, though, hold off on booking Air Berlin flights for departures beyond November.
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