Air Berlin Bankruptcy - Employees, fleet, chocolate hearts

Air Berlin bankruptcy – 372 days later

Jennifer Weitbrecht
21.08.2018
8 minutes

Until 15th August 2017, Air Berlin was Germany’s second largest airline. The company, which filed for administration on that date, continues to be the name on everyone’s lips. There have been headlines aplenty: a controversial federal loan, the breakup of the company, the layoff of 8000 employees, an auction for Air Berlin enthusiasts and outrage at the payout of an executive salary in the millions. 372 days later, then, what has happened since the Air Berlin bankruptcy?

Air Berlin bankruptcy – the creditors

According to Lucas Flöther, Air Berlin’s administrative receiver, the airline’s creditors number around 1.3 million. These include customers and companies, as well as several hundred thousand passengers who have been left out of pocket for unused tickets. The number of creditors was increased shortly before the company went into receivership by several means, one of which was a massive marketing campaign. The company had encouraged customers to buy discounted advance tickets by 14th August 2017. On 15th August 2017, Air Berlin announced its receivership.

Impressive sight at final flight

The 27th October 2017 was a sad day in German aviation history. At 11:45 pm, after 40 years of operation, Air Berlin’s final flight made its way from Munich to Berlin’s Tegel airport. Sentimentality was in the air. The pilot performed multiple loops to create a heart on the flight’s radar, a reminder of the red-wrapped chocolates that were as much a part of every Air Berlin flight as “Amens” at a church service.

1600 spectators were allowed onto the visitors’ terrace free of charge to say goodbye and to witness the special event. The spectators’ sadness was palpable. Several people, many native Berliners among them, felt a strong connection with the company and paid thousands of euros for tickets on the final flight out of solidarity.

What became of Air Berlin’s employees following the bankruptcy?

Germany’s thoughts were with the almost 8000 employees (fondly known as “Air Berliners”) of the low-cost airline who would soon be out of a job. Many people were furious with the politicians who had, they considered, failed the employees, leaving them high and dry – especially once it became known that no redundancy packages had been offered.

Happily, however, more than 85 percent of former Air Berliners have since found other jobs working for companies like Eurowings, easyJet and Ryanair. While this is good news, many are now working under less favourable conditions. According to Verdi, the German United Services Trade Union, cabin crew at Eurowings earn up to 40 percent less than their Air Berlin counterparts did, and even Air Berlin’s pilots have had to lower their expectations. On the other hand, easyJet has been praised for its fair takeover conditions.

In order to defuse the situation somewhat, the German state of Berlin set up a transfer company to assist around 1200 former Air Berlin employees, putting 10 million euros at its disposal. As the employee placement process went more smoothly than anticipated, only 7 million euros were required, a fact which is good news for taxpayers.

Someone who has obviously fared better than his employees is former Air Berlin CEO Thomas Winkelmann, who initially insisted on receiving his full legally secured salary of 4.5 million euros until 2021. Now, though, he has relented, deciding to forgo part of his payout in order to relieve the pressure on the cut-price airline. The final figure, however, is not known.

Lufthansa and easyJet pounce

Right from the beginning, it was clear that Lufthansa and easyJet would take over Air Berlin’s fleet, as well as the airline’s take-off and landing slots. Whether this will turn out to be a smart strategy remains to be seen. According to aviation expert Cord Schellenberg, “Lufthansa and easyJet have snapped up sections of the company with which Air Berlin not only failed to bring in revenue, but which were profoundly unprofitable.” Time will tell what will, ultimately, remain of the cheap flights provider.

During Air Berlin’s liquidation proceedings, Lufthansa took over large sections of the company, including more than 80 planes and (for 18 million euros) its regional airline, LGW. Due to competition concerns expressed by the EU Commission, however, the Austrian Air Berlin subsidiary Niki Luftfahrt GmbH was not taken over by Lufthansa and also declared bankruptcy. Despite this defeat, Lufthansa is still considered one of the winners in Air Berlin’s collapse. Not only does the company have one less competitor to contend with, but it was also able to equip its group subsidiary Eurowings with a large number of planes from Air Berlin’s fleet.

The English cut-price airline easyJet also secured dozens of aircraft, as well as take-off and landing slots, for around 40 million euros, notably enabling it to strengthen its own position in Berlin. Just weeks after the Air Berlin bankruptcy, easyJet’s European chairman, Thomas Haagensen, announced the development of a further easyJet base at Berlin’s Tegel airport, in addition to Berlin Schönefeld. Another piece of good news has emerged: by the end of summer 2018, up to 400 former Air Berlin employees are set to be contracted to easyJet.

Who bought the rest?

The sale of NIKI was initiated several times. After the failed takeover by Lufthansa, NIKI was scheduled to be sold to Vueling, the Spanish low-cost airline owned by aviation group IAG. The passengers’ rights portal, Fairplane, however, lodged an objection. NIKI was ultimately purchased by Niki Lauda, NIKI’s founder, through his company Laudamotion, for around 46 million euros. In the long term, therefore, NIKI will probably end up going to Ryanair. Lauda is already working with the Irish budget airline, which is set to take over the majority of Laudamotion.

Other parts of the company were sold to British Airways parent concern IAG and the Nayak/Zeitfracht bidding consortium. Thomas Cook purchased Air Berlin Aviation GmbH, which was still in its infancy, thus securing flight licenses for the Thomas Cook airline Condor.

Who will receive the rights to the Air Berlin trademark?

By November 2017, the first Air Berlin planes were already repainted and being operated by other airlines. In February 2018, Air Berlin’s insolvency administrator Lucas Flöther announced that he planned to sell off the company’s trademarks and websites, primarily because consumers had such positive associations with the brand. This sale has now, however, been postponed until further notice, as the brand name continues to be required in servicing the airline’s creditors.

What about the federal loan?

In August 2017, the German federal government attempted to give the stricken cheap flights provider a hand up in the shape of a federal loan for 150 million euros. This was intended to ensure that Air Berlin could continue to operate for the immediate future and to prevent travellers from becoming stranded. In addition, the government also hoped to save around 8000 jobs.

The question remains as to why the government approved the loan despite warnings and without waiting for auditing giant PwC’s report. Although it was completed three days after the loan was approved, this report is still classified. One thing is clear: at the time the loan was granted, Air Berlin was already bankrupt and 2 billion euros in the red. As this loan comprises taxpayer funds, reimbursing the German federal government from the liquidation proceedings is a priority, and 75 million euros have already been paid back. According to the receivership administrator, the chances are good that the loan will be repaid in full over the next few years.

What happened to Air Berlin’s trademark chocolate hearts?

The concept of the red chocolate hearts originated with Air Berlin’s takeover of DBA Luftfahrtgesellschaft mbH, an airline which gave out heart-shaped chocolates wrapped in green foil. These proved so popular with passengers that Air Berlin’s then CEO, Hans Rudolf Wöhrl, hit upon the idea of creating a red-wrapped version – and Air Berlin’s chocolate heart cult was born.

Passengers loved the red-wrapped treats so much that they were auctioned off after Air Berlin’s receivership proceedings opened. An impressive 50,000 potential buyers registered an interest and the price was equally remarkable: 352 EUR for 100 Lindt chocolate hearts, the equivalent of paying 17.60 EUR for a single 100g bar of chocolate. The purchasers were clearly diehard Air Berlin fans.

In addition to the chocolate hearts, seats, serving trolleys, model planes, life vests, blankets, travel bags, teddy bears and much more were also auctioned, raising several hundred thousand euros for the airline’s insolvency estate. Air Berlin uniforms were, however, not auctioned off. This was to prevent criminals from using the insignias on them to gain access to secured locations. Instead, several examples have become museum pieces. The Deutsche Technikmuseum (German Museum of Technology) purchased a large quantity of items directly from the airline itself with the aim of making uniforms, rows of seats – and, of course, chocolate hearts – available to the viewing public. Air Berlin lives on – in Germany’s hearts, its memories and in its museums.

Air travel in Germany is gradually returning to normal. The question remains, however, as to how the Air Berlin bankruptcy occurred in the first place. How, too, can the last few ends be tied up? We will provide answers to these questions in subsequent articles.

Cover picture Pixabay – suesun

by Jennifer Weitbrecht

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