Air Berlin must produce a “viable” survival plan to win state backing, Germany’s Economy Ministry said, after top shareholder Etihad Aviation Group scrapped talks on a key project aimed at rescuing the unprofitable carrier.
German federal authorities, along with the states of Berlin and North Rhine-Westphalia, are assessing Air Berlin’s request for financial guarantees, and a decision will come only after a thorough review of the airline’s prospects, ministry spokeswoman Beate Baron told reporters Friday in Berlin.
“It’s important that essential conditions are met for any decision on a guarantee, and that will require a viable concept for the future,” Baron said. “The company is called upon to submit all required documents.”
Abu Dhabi-based Etihad on Thursday scrapped efforts to set up a joint venture comprising Air Berlin’s Niki leisure brand, which was to be sold to Etihad for €300mn ($335mn), and the TUIfly airline of tour operator TUI. Air Berlin then said it’s requesting financial guarantees from the two states, sending its bond maturing in 2018 to a record low. The carrier has posted losses in eight of the last nine years, and it’s been struggling this year with worsening flight delays amid a restructuring, including fleet cutbacks.
Air Berlin and Etihad said on Friday that the sale of Niki will still take place but at a later date, declining to provide additional details. Until the transaction is completed, Niki will be run as a separate part of Air Berlin and focus on tourism destinations.
“During the restructuring of the company, we will continue to support Air Berlin’s management in its efforts,” Ray Gammell, Etihad’s interim chief executive officer, said in a statement, adding that it plans to complete the Niki deal “shortly.”
That support may be key. Armin Laschet, the state Christian Democratic Union party leader who’s seeking to form a government in North Rhine-Westphalia after winning an election there last month, said Air Berlin’s request will have to wait.
“There’s no new government in office, nor is there a comprehensive, assessable application from the company,” Laschet said in an interview with Rheinische Post newspaper.
“With respect to those affected and the significance of this decision, any speculation is out of order.”
A tractor pulls an Air Berlin aircraft on the tarmac at Duesseldorf airport in Germany. The German federal authorities, along with the states of Berlin and North Rhine-Westphalia, are assessing Air Berlin’s request for financial guarantees, and a decision will come only after a thorough review of the airline’s prospects, a ministry spokeswoman said.
