February 5, 2019 / 6:10 AM / 9 months ago

Holiday airline Germania collapses, cancels all flights

BERLIN (Reuters) - Holiday airline Germania collapsed on Tuesday and canceled all flights immediately, the latest to succumb to turbulence in the European airline industry as it failed to secure financing to navigate a short-term cash squeeze.

FILE PHOTO: A Germania Airbus A319-100 airplane takes off at the airport in Palma de Mallorca, Spain, July 28, 2018. REUTERS/Paul Hanna

The insolvency of the German company, which carried about 4 million passengers a year, followed the failure of Germany’s second-biggest carrier, Air Berlin, in 2017.

Britain’s Monarch Airlines and Alitalia also filed for insolvency in 2017. German charter carrier Small Planet Airlines hit financial trouble last year after an expansion drive.

Germania cited rising fuel prices, a stronger dollar, delays in integrating new aircraft into its fleet and high maintenance costs.

“Unfortunately, we were ultimately unable to bring our financing efforts to cover a short-term liquidity need to a positive conclusion,” Chief Executive Officer Karsten Balke said in a statement.

The carrier’s 37 aircraft mainly flew German sun-seekers to more than 60 destinations in Europe, North Africa and the Middle East. The Berlin-based company, founded in 1986, also offered flights to less conventional destinations including Iran, Iraq and Armenia.

It said all flights had been halted overnight after it filed for bankruptcy late on Monday.

CEO APOLOGY

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.

The Social Democrats, junior partners in Chancellor Angela Merkel’s ruling coalition, vowed to push for creation of a European system to protect passengers in the event of bankruptcies, the Handelsblatt newspaper reported late Tuesday.

“The new EU commission and the new European parliament must tackle this urgent problem,” it quoted the party’s legal spokesman, Johannes Fechner, as saying.

FURTHER CONSOLIDATION?

“The horror for German air travelers continues,” Klaus Mueller, head of the Federation of German Consumer Organisations, said of the airline’s demise.

On Monday, Europe’s largest budget airline Ryanair, posted its first quarterly loss since 2014 and said it expects further consolidation over the next 12-18 months because of overcapacity.

It predicted a further rise in oil prices would hit smaller airlines that cannot afford to increase their oil price hedging.

Slideshow (6 Images)

In a video message on Twitter, Ryanair’s chief operating officer on Tuesday said the airline will offer Germania pilots, engineers and cabin crew “immediate” starts if they apply for vacancies in Germany, Austria and across Europe.

Germania’s financial problems emerged at the start of January when it said it was examining several financing options to secure short-term liquidity.

On Jan. 19 it said it had a commitment for 15 million euros ($17 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.

Additional reporting by Reuters TV in Duesseldorf, Thomas Seythal and Andrea Shalal in Berlin and Padraic Halpin in Dublin; Writing by Caroline Copley; Editing by Keith Weir, David Goodman and David Gregorio

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