Air Berlin's filing for insolvency, confirmed today, has been on the cards for some considerable time. The one-time pride of Palma airport has suffered a seemingly inevitable fate.
The German airline had notched up losses amounting to 2.7 billion euros over a period of six years as well as a net debt of 1.2 billion. Its main shareholder, Etihad, has finally had enough, despite some three months ago having reserved some 350 million euros of further financial support to cover an eighteen month period.
The German government has made available up to 150 million euros of credit to enable Air Berlin to keep operating for the time being. Normally, a company would cease operations. In the case of the German airline, though, there are passengers to think about in the short-term. It should in fact be able to continue until the end of October, which will be reassuring for the Palma summer season routes.
Air Berlin's woes have been well chronicled. Even before it closed the hub at Palma, it had been cutting back on routes. This was once an airline that almost single-handedly kept Palma going in the winter months because of its frequencies and routes. They were to prove to be unsustainable.
The hub had to go because it was no longer viable to be transferring passengers to flights to the mainland. Greatly increased competition from German airlines flying direct put paid to the hub. As did the staggering losses. Etihad's apparent faith, which it hadn't shown in Alitalia, owed something to a desire to keep intact an international alliance. But even its faith wore thin.
Lufthansa, which came to Air Berlin's rescue last year with a lease agreement, is said to be negotiating to buy parts of what was once its main rival. Ryanair suggest that a takeover is on the cards and question the legitimacy of this under competition rules.
Mention of Ryanair simply reinforces the problems that Air Berlin had. It was originally something of a low-cost operator, but once low-cost competition really became intense, it was less and less able to respond.
Prior to today's announcement, Air Berlin, for two decades the leader at Palma airport, had been passed by Ryanair. Such has been the decline that up to July, Air Berlin (together with Niki, for which bankruptcy protection is not being sought) had carried almost half a million fewer passengers. Ryanair was adding them, as were easyJet, Vueling, Norwegian and Eurowings. Germania was another airline assaulting it.
While its end is sad and was inevitable, it's not all gloom. In addition to flights being able to continue, courtesy of the German government, the association with Niki means that handling jobs - some 700 of them at Palma - are not threatened. Etihad bought Niki from Air Berlin last year, and a code-sharing system has operated this year. This allowed the Air Berlin routes to Palma to operate this year, and it may well be that they continue next year as Niki flights.
These 700 jobs are not direct ones in that they are via the handling company Acciona. There are another 55 employees who were the last remaining in Palma. Most of them work at the airline's call centre. Their future is uncertain.
4 comments
To be able to write a comment, you have to be registered and logged in
At least the German government are helping it stay afloat till the end of the season,Would May and her lot do the same i think NOT.
The number of AB Flights caused a queuing problem, for Aircraft departing from Palma. Especially throughout the Winter. Any Airline proposing to use Palma as a " Hub " will cause traffic problems.
Monarch are again also on the cliff edge again ! ,,
The first toll of the death bell for mallorca, no winter flights from ryanair second bell !