Air Berlin files for insolvency – what happens next?

Yesterday’s news was dominated by Air Berlin’s insolvency. As I’m currently in Germany I got to read about it from all sides.

airberlin new york berlin airplane

Things haven’t been great for the German airline in recent years, partly due to the delays in opening the new Berlin Brandenburg airport which would have provided Air Berlin with a strong home base.  The airline had invested heavily expecting in advance of this.

Etihad owns 29% of the airline and has been injecting a lot of money over the last six years.  As well as direct loans, it has injected funds through backdoor routes (taking control of the Topbonus loyalty programme at what appeared to be an inflated price) as well as helping out with pilot training and fleet management.  None of this was enough.

Now Etihad has decided to not ‘loan’ any more money to Air Berlin – €250m of a €350m investment went in as late as April – and it had to file for insolvency after a further promised €50m from Etihad failed to arrive.

According to Der Spiegel Angela Merkel and Lufthansa CEO Carsten Spohr visited Abu Dhabi back in May to talk about the future of Air Berlin and were promised financial support until Autumn 2018.  Looking at yesterday’s news this promise was broken within a few months, probably driven by the departure of Etihad CEO James Hogan.

For now the biggest issue for those with booked Air Berlin flights is whether or not they will be able to fly to their destinations.

For Head for Points readers, the main concern is likely to be over Avios redemptions.  Air Berlin flights from North America to Germany represent excellent value, as the tax can be as low as £4 one way in Business Class.  My review of an Air Berlin Business Class flight from New York to Berlin is here.

Thanks to the German government, who announced a loan – unlikely to be seen again – of €150 million to Air Berlin yesterday, there shouldn’t be any issues at least for the next three months.  This keeps the airline alive until after the German elections.  Tickets are still being sold and the current flying schedule will be met.

Of course, new ticket sales are likely to be very slow, and suppliers are likely to want paying in advance from now on.  Even solvent European airlines tend to lose money over the winter season.  The €150m may not be enough.

No one knows for certain what will happen next.  Talks with Lufthansa are far advanced, as was well known.  The Financial Times (paywall) quoted Mr Dobrindt Germany’s transport minister: “There is no transfer of Air Berlin as a whole to Lufthansa — there are parts of the business that will go to Lufthansa and there are interested parties for other bits of the business, so we do not expect cartel difficulties”.

Etihad was reported to be negotiating for additional flying rights to Germany as part of any transaction but that is now off the table, clearly.  Lufthansa’s Eurowings subsidiary would benefit from being merged with the Air Berlin short haul routes.  Lufthansa’s willingness to enter the long-haul market from Dusseldorf and Berlin is not clear.

easyJet is also reportedly interesting in taking over part of the short-haul operation, potentially just the Airbus-operated fleet.

Should you be worried if you have an Air Berlin Avios ticket booked?

oneworld has issued a statement that Air Berlin will continue to be part of the alliance throughout the insolvency process.  Air Berlin’s NIKI subsidiary is not in administration and continues to operate as normal.

If you have a trip to North America booked on Avios, any of these things may happen:

You fly as booked – if Lufthansa take on the long haul routes, it will take longer than a year to integrate them and the existing timetable and bookings should be honoured

Your flight is cancelled – British Airways rebooks you via London or possibly Madrid

Your flight is cancelled – British Airways refunds all of your Avios and taxes.  You’d still need to find a new flight but you’re not out of pocket.

However it works out, you should be fine.

Be grateful that you do not have any Air Berlin Topbonus miles, because reports on Flyertalk last night state that redemptions on Etihad or any oneworld airlines such as BA are now blocked.  All you can book is Air Berlin ….

Interestingly, if you need a short notice Avios reward flight to North America, take a look at Air Berlin.  There is a lot of availability right now.  Our main article on how to redeem with them is here.

We will keep you posted on updates.

(Want to earn more Avios?  Click here to visit our home page for the latest articles on earning and spending your Avios points and click here to see how to earn more Avios from current offers and promotions.)

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Comments

  1. Some editing required:

    “Air Berlin will commence to be part of the alliance throughout the insolvency.” This doesn’t make a lot of sense.

    “Be grateful that you do not have any Air Berlin Topbonus miles.” A strange thing to say – HfP has no way of knowing whether or not I own any Topbonus miles.

    • “The airline had invested heavily expecting in advance of this.”

    • I take it you got the idea of what the article was saying? No need at all for blunt rude criticisms like that. Jog On!

    • Agree – it is already a member. It will *continue* to be a member of … makes more sense. I had to go to oneworld website to understand what was trying to be said here.

      • Apologies, it should say ‘continue’.
        Here’s the official quote: airberlin continues to operate as part of oneworld®, following the German airline’s filing to commence insolvency proceedings under self-administration, to enable it to continue with its restructuring process.

    • Patrick, in this new brave world, anyone anywhere can find out info about you…indeed usually info a lot more concerning than any topbonus balance you might have.

  2. Patrick and Dolly D, when are you starting writing your respective travel blogs? The amount of errors compared to the amount of information Rob provides is negligible.

    • You mean ‘number of errors’… Sorry, couldn’t resist :)) – I personally don’t see any problems with errors in the articles (compare them to other blogs, which are riddled with mistakes – plus Anika isn’t a native speaker…lol) – equally, I think it’s fine for people to point out errors or unclear passages, so that Rob/Anika can correct if they wish! So no need to go to war…

      • Totally agree @brian the disproportionate reaction to any form of perceived criticism, constructive or otherwise, is strange. I don’t think the comments above were unfair – straight to the point maybe, but you don’t need to tell Rob how much you love him before you point out an error or difference in opinion…

  3. I thought there were strict EU rules about governments propping up national airlines ? What’s the realistic chance of Germany ever seeing this ‘loan’ paid back /

    • Some articles have said Ryanair was making a complaint under State Aid rules

    • There are strict rules against state aid but as this was provided by Germany, those rules will be ignored.

    • czechoslovakia says:

      I don`t see any difference here between Germany/Airberlin and Hungary/MALEV, so fully expect the EU to have something to say about it…..
      For once, I actually fully support Sky marshall O`Leary in complaining.

      • Michael Jennings says:

        Sadly, I think there is a large country / small country double standard here. If an airline in a small country (Hungary or Belgium) gets into trouble, then the state aid is (quite correctly) ruled illegal and the airline has to fold. On the other hand, the Italian government has been able to get away with endless bailouts to Alitalia.

      • RogerWilco says:

        The difference between MA & AB is that the German gov’t seems to have a plan, while the Hungarian one had no clue what could/should have been done. An early show of incompetence by Mr Orban and his posse.
        Operations continued one day after SN and SR went belly up. When MA did, (mos of) the planes were flew back to the leasing company the next day.

  4. Hooray! I’ve lifetime platinum status on airberlin… My status is valid until 2019, longer than we can expect the airline to be around. What are the chances of Lufthansa matching status over the next few months? At least I got a visit of the First Wing and Galleries First out of my status.

    • We have silver (but the physical cards never did arrive).
      And enough TopBonus miles for this to be painful unless they get converted to Lufthansa or Etihad entitlements.

      • I’ve over 200k… topbonus closed its shop. So, my topbonus miles can only be spend on airberlin flights over the next three months max. I doubt any airline will convert them into their own miles. topbonus is a separate business (a british one, actually) 70% of which is owned by Etihad.

    • hearingdouble says:

      Air Berlin issue “lifetime” platinum status that ends in 2019? Either Air Berlin have a funny notion of what “lifetime” means, or they have special plans for you in 2019…

      • life time status has never been your life time. Remember those with lifetime status on bmi and what happened when diamond club was merged into BAEC? airberlin and topbonus will not survive this in their present form. My status will be valid longer than either the airline or the FF program exists.

        Not even oneworld partners believe so… BA has some really good fares ex-Germany to SFO and MIA (SFO is less than 3500 in First), both airberlin destinations. Other destinations are as expensive as always.

  5. I flew with Air Berlin a few months ago. I’ve never seen flight attendants with as little regard for safety. They didn’t bother checking if people had their seat belts on before landing, didn’t make people put their seats upright. They were in the galley with the curtain drawn until right before landing.
    And my suitcase was delayed two days from Berlin – Helsinki even though I was on a direct flight, no connection. No other airline has lost my suitcase on a point-point trip before.
    On the way out they changed the “operator” from Air Berlin to Niki a day before the flight. This caused all kinds of problems since I wasn’t allowed lounge access in Helsinki because of that. But the plane had “Air Berlin” painted on the side anyway.
    Would never have flown with them again, the safety issue especially was inexcusable. When I complained about that later they did not seem that concerned.

    • “No other airline has lost my suitcase on a point-point trip before.”
      BA failed to load my luggage on a flight from Toulouse to Orly and I had to wait 4 hours for it to arrive.
      One of my colleagues flew BA to Mulhouse every week for 3 months and they lost his luggage every week. He gave up and just left his stuff with one of the local staff at the weekends.

  6. We moved all our recently earned Ethiad miles to TB. Would never have known of the option to do so without this site. I should have cashed them in immediately!

  7. Typical German hypocrisy a loan! I thought this would be covered by the EU unfair competition rules, its a subsidy dressed up as a loan nothing more. Angela is simply buying votes to ensure her re election.

    Can you imagine if it was a UK airline, the British government wouldn’t dream of lending them a penny. We play by the rules, (including the spirit of the law). No wonder we are leaving that corrupt organisation known as the EU.

    • Concerto says:

      Yeah, we play by the rules. We just abandon loads of passengers all over the place during holiday time, just like any other banana republic would do. Remember FlyGlobespan, to name just one?

      • But it isn’t about “abandoning passengers all over the place during holiday time”.
        You could solve that by agreeing to keep the airline solvent while it recovered passengers already abroad.
        This is about keeping the airline operating with no fixed date to end support and continuing to take bookings.
        If I were a rival airline I’d call that a state subsidy of a loss making airline.

    • Chilangoflyer says:

      What the UK does, ist the British government decision and problem. But I can asure you, that this loan is within the EU rules (as was the lian for Alitalia) as this was an unexpected move of Etihad and a necessary one to save the employees for the next months.

      Concerning “your” move out of the EU, I do not cry seeing the UK go. Afterwatds everyone in the Union will play by the same rules without any British “extras”. I only hope, the EU will abandon all these extras, if the UK revokes the Brexit later….

      • It’s quite amusing that it’s seen as a sound business model to be relying on money injected into an airline by another company to cover its day to day losses ad infinitum.

        If I went to my bank and asked for a loan to cover day to day losses and to keep my staff (incl me) being paid they’d have a right old chuckle. It’s like doing that, running out of goodwill at the bank and then rocking up to the government and them doing the same thing.

        I understand that companies occasionally need assistance in bad times, but firstly if state aid is suddenly allowed it shouldn’t be some shady technicality which allows it in some situations and not others.

        Further, this airline has got itself into trouble for far too long to require state aid as a last resort. The last resort was months/years ago.

    • They need to navigate the pre-election period!
      Politico put it very nicely today:
      “Who says Germans don’t like bailouts? In what might be the wisest political decision of the campaign season, Berlin agreed to keep beleaguered Air Berlin afloat just long enough for the thousands of Germans sunning themselves in the Aegean and the Balearic Sea to arrive home safely and vote.”

  8. Hi I have a Berlin to Abu Dhabi flight booked using Avios in April 2018.

    Any thoughts on what may happen regarding this booking?

    Thanks

    Ps the full itinerary not on one booking it is Glasgow to Berlin (easyjet) then Berlin to Abu Dhabi (avios air berlin) and Abu Dhabi to Glasgow (avios BA)

    • If your ticket number starts with 125 then it is BA’s responsibility to rebook you on the TXL-AUH flight. They might you rebook onto a TXL-LHR-AUH flight, though. If you were only connecting in TXL, you need to check your connection. There’s still plenty of time, though.

      • It would appear that BA offered to rebook Malev redeemers when that airline collapsed. But I would caution that I do not believe it is BA’s “responsibility” to provide you any more than a refund. BA are AB’s agent in the transaction, not your counterparty.

        • If BA pays for the AirBerlin redemption seat in arrears then there they have not incurred costs on the transaction if they cancel and refund.

          Where they will loose is on TopBonus members who have flown on BA if they don’t receive the money from TopBonus. Hence they have stopped their losses increasing by preventing more TopBonus redemptions on their flights and are probably trying to settle all the balances.

    • If, as expected, air Berlin no longer exist in April, I would expect BA to offer you BER-LHR-AUH, then AUH-LHR-GLA, all on BA. On the positive side, I doubt BA would ask for the extra taxes in this case

    • I would read the article again…..what is there to worry about ?

  9. Concerto says:

    I had a lot of TopBonus miles. Luckily I used most of them up on difficult to get but very good value upgrades to the US. I’m stuck with about 64,000 now, mostly because they’ve been printing them like Yugoslav Dinars lately.

  10. the real harry1 says:

    decent F Times article here – no paywall (might be the same as in the article)
    https://www.ft.com/content/83165178-81b9-11e7-94e2-c5b903247afd

    they say the 2 interested parties are Lufthansa and EasyJet

    • the real harry1 says:

      Please use the sharing tools found via the email icon at the top of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at https://www.ft.com/tour.
      https://www.ft.com/content/83165178-81b9-11e7-94e2-c5b903247afd

      Anand Date, analyst at Deutsche Bank, said that a combined Lufthansa-Air Berlin would have “strong positions” at several key airports, including Vienna, Düsseldorf and Zurich.

      “It’s a very close statement between Lufthansa, Air Berlin and the German government, which suggests Lufthansa is in quite a good position with regards to what it wants to do with Air Berlin’s assets,” he said.

      Lufthansa already has a close relationship with Air Berlin following an agreement last year for the latter to operate 40 aircraft for the German flag carrier’s subsidiaries.

      Ryanair, Europe’s biggest low-cost airline, hit out at Lufthansa’s involvement, saying that the deal was “clearly being set up for Lufthansa to take over Air Berlin, which will be in breach of all known German and EU competition rules”. It said it had lodged complaints with the European Commission and the German cartel authority.

      Please use the sharing tools found via the email icon at the top of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at https://www.ft.com/tour.
      https://www.ft.com/content/83165178-81b9-11e7-94e2-c5b903247afd

      But the German government justified its intervention on the grounds of Air Berlin’s “ongoing and positive long-term discussion” with Lufthansa and another, unnamed airline “to continue operations under different ownership”. EU state aid rules restrict government intervention.

      EasyJet, Europe’s second biggest low-cost airline, is understood to be the unnamed carrier, according to two sources people close to the talks. The company declined to comment.

      Speaking on Tuesday, Germany’s economy minister, Brigitte Zypries, said: “What matters is, the customers can feel secure.”

      Alexander Dobrindt, transport minister, said he did not expect any deal to rescue Air Berlin involving Lufthansa to raise competition concerns.

      “There is no transfer of Air Berlin as a whole to Lufthansa — there are parts of the business that will go to Lufthansa and there are interested parties for other bits of the business, so we do not expect cartel difficulties,” Mr Dobrindt said.

      The European Commission said it was in “constructive contact” with Germany over the issue.

    • Yes paywall – if you want to get around the FT paywall you need to go direct to the article from Google, e.g. by searching for “Financial Times Air Berlin”

  11. Have a couple of longhaul J redemptions (made with Top Bonus points) coming up in November, hopefully they’ll be honoured.
    I’m sure the crew won’t be especially chipper 🙁

    Might turn out to be a poor use of points as cash prices might drop significantly. Even worse use if they screw me over.

    Only have 7k left now so not the end of the world as long as existing bookings in Nov are honoured. Mind you, I’d be quite happy to be moved onto Etihad J instead !!

    • Feeling a bit worried now as my November longhaul (TopBonus points redemption) J flights are for a destination no other One World airline flies to and neither does Etihad (who own TopBonus as I understand it) so potential options of switching airlines & routes don’t even exist in my case 🙁
      Think accomodation can be cancelled until 31st October without penalty.
      Nuts. Could do without this hassle / stress.

    • Currently their cash pricing seems to be extremely high on the TATL flights I looked at.

  12. Big loss for low cost avios opportunities!

  13. Looking at their results it just seems a basketcase of a company, although it seems that plenty of consultants have done well out of it due to their numerous strategy reforms.

    Why is it that Ryanair seem an unacceptable option, but Easyjet are seemingly ok?

    • I can vouch that Easyjet treat their customers much better than Ryanair do.
      I suspect the same applies to their staff?

  14. I was in DUS Air Berlin Lounge on Sunday and their DUS-JFK flight was cancelled.
    May be the decision to file for insolvency was already made and they could not get fuel credit from the supplier?
    DUS Air Berlin lounge is also coming off Priority Pass network at the end of the month. Coincidence?

  15. I appreciate Top Bonus doesn’t get much attention on HFP but if you could keep us appraised as the situation develops that’d be great.
    Most readers will be looking at Avios redemption situations of course but some of us have Top Bonus bookings too.
    Any suggestions for blogs which do a lot of Top Bonus stuff ?

    As Etihad owns Top Bonus (as I understand it) and I’ve paid for flights using Top Bonus would Etihad have any level of responsibility to get me to my destination or compensate me at least ? I have literally no idea. I doubt it actually. Rambling now.

    Cheers 🙂

    • Assuming you speak German, Vielfliegertreff (excuse my spelling) is the main forum. There is also an Air Berlin board on Flyertalk which is the best English-language info source.

      As of next month, the ex-Avios CEO Gavin Halliday will be overseeing Topbonus as part of his new role running all the Etihad loyalty schemes (and, oddly, Etihad Holidays). Gavin is very pro-customer and, within the constraints set by Etihad, I’m sure he will do his best to salvage something for members.

      • Thanks Rob, sound like Gavin is likely to do his best for customers.

        mid Aug to mid Nov is the 3 month period and my flights back are 16th Nov.
        I am also sceptical that €150m will last three full months. I guess I’ll just have to wait and see.

        If cancelled I’m wondering if TopBonus will reinstate my points. I don’t expect so but it depends how TopBonus actually pays AirBerlin; in terms of how and at what time / date. TopBonus may actually still have my points, not AirBerlin (or the cash value they’d pay AirBerlin).
        The other complication I have (and others I expect) is that IF points are reimbursed, how will they be treated if they are reinstated after the expiration date of the original points !!

        Thanks for your reply
        Fingers crossed

        Those who have paid in cash might be in a slightly better position if flights are cancelled as whilst AB won’t give you a penny you might find credit card or travel insurance will compensate you.
        The issue with using points which complicates my booking is that it’s nothing to do with a credit card and I expect most (if not all) travel insurance companies won’t cover loss of points.
        Therefore if I do manage to get Credit Card to refund me or Travel Insurance compensation it would only be for the taxes & fees paid (about £400) and not the true value of two business class flights to Curacao
        There goes my gift to my Mum for her 70th Birthday of 2weeks in Curacao.

        • The tricky issue of course is that Etihad owns TopBonus. TB has little chance of becoming insolvent albeit that AB probably owes it for points awarded on recent flights.

          The interesting issue is what TB points can be used for now ….

          • Right now: They can’t be used at all. All ticketing is done via AB which isn’t an option and their topbonus shop was a third party that terminated their contract.

      • Sadly I don’t speak German and Google translate still creates some rather pigeon English translations of German !!

        Some things make zero sense 🙂