Air Berlin files for insolvency but says passengers are unaffected

Published by Edmund Greaves on 15 August 2017.
Last updated on 15 August 2017

Air Berlin files for insolvency but says passengers are unaffected

Air Berlin (branded as ‘airberlin’) has today filed for insolvency, although it says flights will “continue as planned”.

The German airline, which is the tenth biggest in Europe, has requested to start insolvency proceedings at its local district court in Berlin-Charlottenburg.

It says this is due to the withdrawal of monetary support from Etihad. The Abu Dhabi based airline had given a 250 million euro cash injection into Air Berlin in April this year. But in a statement today, “minority shareholder” Etihad said Air Berlin’s business has “deteriorated at an unprecedented pace” meaning it “cannot offer funding that would further increase our financial exposure”.

Air Berlin says it’s been given a bridging loan by the Federal German Government to “maintain flight operations for the long-term”.

Rival German airline Lufthansa has also promised to support the restructuring of Air Berlin jointly with the German government.

A Lufthansa spokesperson says: “Lufthansa is already in negotiations with Air Berlin to take-over parts of the airberlin Group and is exploring the possibility of hiring additional staff. Lufthansa intends to conclude these negotiations successfully in due time.”

Air Berlin has over 80 flights a day leaving Heathrow airport and, according to its website, it transported more than 2.4 million passengers worldwide in July alone.

What happens to Air Berlin flights?

The airline says all flights, plus those of its low-cost brand NIKI, will to continue to operate as planned.

It adds that its flight schedules remain the same, bookings are still valid, and the airline is continuing to accept new reservations.   

Thomas Winkelmann, chief executive of Air Berlin, comments: “We are working tirelessly to achieve the best possible outcome for the company, our customers and employees, given the situation.”

Lufthansa says that it will ensure all aircraft currently operated by Air Berlin on behalf of airlines Eurowings and Austrian Airlines will continue operating as before.

While Etihad adds: “We expect Air Berlin operations to continue during administration. We have a commercial relationship with Air Berlin across a range of areas, including codeshare operations, and we will support Air Berlin’s management during these difficult times.” 

Is Air Berlin ATOL protected?

ATOL – the Air Travel Organiser’s Licence - protects consumers who book holidays with a firm that then goes bust. It ensures these holidaymakers do not get stranded abroad or lose money.

Air Berlin, however, is not a member of ATOL as it is not a UK based company.

That said, if you bought your flight as a part of a package from a UK-based travel agent, this will be protected by ATOL.

If you booked flights only via a UK-based travel agent, it’s at the discretion of the agent as to whether it will offer ATOL protection as it’s under no legal obligation to do so in this scenario.

Of course, if you bought a flight from Air Berlin by credit card you are protected under Section 75 of the Consumer Credit Act 1974. This provision obligates credit card providers to protect all credit card purchases over £100. Chargeback offers similar protection for direct debit users and credit card users paying less than £100 – although unlike Section 75 this isn’t a legal requirement. It’s also unlikely you’ll get your money back at this stage as Air Berlin says it is still honouring flights.

Moneywise has asked Air Berlin if it will directly offer refunds to customers who no longer want to fly but it has yet to respond. We will update this article if it provides an answer. 

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