air berlin has been a financial disaster for years, and the subsidies from Etihad have stopped so the airline had no choice but to file for bankruptcy.
The German transport ministry stepped in with a government subsidy to keep the airline running for 3 months, guaranteeing a €150 million loan.
They lost nearly a billion dollars last year. Etihad’s total amount in the airline is estimated at about $2 billion. Last month’s traffic was down about 25% year-over-year. They’re smaller than German rival Lufthansa. They face significant short haul ultra low cost carrier competition. They’ve been hurt by interminable delays in opening the new Berlin airport.
It seems unlikely that the airline will survive, and the government’s money is being used to keep the carrier afloat while bidders carve up the assets, travelers fly on their existing tickets, and the government hopes some jobs are saved. Most tickets are purchased within three months of travel.
@FlyingDutchBlog points out that since the carrier has entered insolvency proceedings, customers are like suppliers as unsecured creditors — amounts the airline may owe are frozen. That means refundable tickets purchased before the airline filed are no longer refundable!
This doesn’t likely disadvantage very many readers. I don’t imagine there are many of you who purchased refundable tickets on air berlin. But it’s interesting nonetheless because anyone who spent more for a refundable ticket as a hedge against the financial problems at the airline not only is holding a ticket in a time of instabiltiy but paid more for the privilege of doing so while not keeping the option of a refund as-promised by the carrier.