Air Berlin

A Good Time to Go

30 Jahre AIR Berlin
Singing from the same hymn sheet? German Chancellor Angela Merkel with members of the Air Berlin board and staff. Source: Picture Alliance / Eventpress

The choice of words was strong, as is always the case with the Irish budget airline Ryanair. It said Air Berlin’s bankruptcy on Tuesday was “artificially induced,” implying that there was a conspiracy to enable Germany’s national flag carrier Lufthansa to take over its rival.

Angela Merkel’s government has stepped in with a €150 million taxpayer-funded bridging loan to shore up Germany’s second largest airline while its affairs are sorted out. In line with its strong words, Ryanair – a rival to both Air Berlin and Lufthansa in the German market – filed a complaint with European Union competition authorities against the bailout.

It seems unlikely that it will succeed, because it is clear that the Air Berlin insolvency is anything but artificially induced. In fact, it was overdue. The airline has been burdened by negative equity and overwhelming debt for years. Any other business would have filed for bankruptcy long ago. The carrier was only able to continue operating because major shareholder Etihad, the national airline of the United Arab Emirates, kept injecting more and more of the liquidity necessary to avoid insolvency. But it couldn’t work in the long term.

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