Berlin: German holiday airline Germania collapsed on Tuesday after it failed to secure financing to meet a short-term cash squeeze and said it would cancel all flights immediately.
Amid an Airline Industry turmoil, Europe seems to be the worst hit. Jitters are being felt in Asia too, once again after airlines like Kingfisher, Air Deccan went down and shut operations in Oct 2012. Air Deccan incidentally was taken over by Kingfisher before the later went bust. Recent news of India’s famous Airlines Jet Airways under financial stress and delaying employee salaries by upto 2 months could be another cause to worry for the airlines industry.
The insolvency of Germania, which carried around 4 million passengers each year, follows on from the failure of Germany’s second-biggest airline, Air Berlin, in 2017, and underscores the turbulence in the European airlines industry.
Britain’s Monarch Airlines and Alitalia have also filed for insolvency in recent years.
Germania, founded in 1986, blamed rising fuel prices, a stronger dollar, delays in integrating new aircraft into its fleet as well as a high number of maintenance services for the cash shortage.
“Unfortunately, we were ultimately unable to bring our financing efforts to cover a short-term liquidity need to a positive conclusion,” Chief Executive Karsten Balke said in a statement.
Germania has filed for insolvency. Flight operations are terminated. Further information: https://t.co/gWgJh3szr1
— Germania (@flygermania) February 5, 2019
Germania’s 37 aircraft mainly flew German sun-seekers to more than 60 destinations in Europe, North Africa and the Middle East. It said all flights had been halted overnight after it filed for bankruptcy late on Monday.
A spokesman for the airline’s administrators said it was unclear whether operations could resume and whether the company could continue.
CEO Balke thanked Germania’s staff and apologized to passengers who had booked directly and would not be entitled to alternative flights. A Germania spokesman declined to comment on the number of passengers or staff affected.
“I have no idea whether we are going to be put on another flight or whether we can book our own new flight through another carrier. No idea,” passenger Iris Fenske told Reuters TV at Duesseldorf airport.
The Federal Association of the German Aviation Industry said other airlines, including Condor, Tui Group’s TUIfly and those belonging to the Lufthansa Group, would offer stranded Germania passengers special rates to return to Germany.
Tour operators will organize alternative travel arrangements for holidaymakers who have booked package deals, the German Travel Association (DRV) said.
Germany’s Economy Minister Peter Altmaier, a conservative, said he had no specific plans to offer help to Germania, adding the government would watch the situation closely.
Europe’s largest budget airline Ryanair, which posted its first quarterly loss since 2014 on Monday, said it expected further consolidation in the industry over the next 12-18 months due to overcapacity.
It predicted a further rise in oil prices would put the squeeze on smaller airlines that can’t afford to increase their oil price hedging.
Germania’s own financial problems emerged at the start of January when it said it was examining several financing options to secure its short-term liquidity needs.
It said on January 19 it had received a commitment for €15 million ($17 million, Dh63 million) in funding that would secure its medium and long-term future, but at the end of last week it confirmed media reports that it had delayed paying wages.
Air Berlin, which served around 30 million passengers a year filed for insolvency in 2017 and ceased operations. Many of its aircraft were absorbed by bigger rival Lufthansa.