October 17, 2018 / 10:24 PM / a month ago

German government says airlines could face more bankruptcies

BERLIN (Reuters) - Increasing competitive pressures inside and outside Europe could lead to additional airline restructurings and bankruptcies, the German government said in a response to a parliamentary query that was published on Thursday by the Handelsblatt newspaper.

The government did not comment on whether it would offer other airlines help such as the 150 million euro bridging credit it provided to Air Berlin, Germany’s second largest airline, when it ran into trouble last year.

“Increased competitive pressure could result in further business restructurings, such as bankruptcies,” the government said in response to the query from the pro-business Free Democratic Party (FDP).

Nordic budget airline Primera Air, which began in 2003, this month became the latest European carrier to go bust, telling staff that all flights were being halted and leaving thousands of passengers stranded.

The collapse came exactly a year after Britain’s Monarch Airlines went under after falling victim to intense competition for flights and a weaker pound. Air Berlin filed for bankruptcy protection in August 2017.

Reinhard Houben, economic spokesman for the FDP, told the newspaper that a solution was needed to ensure that passengers did not get stranded but taxpayers did not get stuck with the bill.

Houben said his party backed requiring airlines to buy insurance that would cover the cost of bringing back passengers, with the costs to be covered in the ticket prices.

“The insolvency of an airline must not become another risk for the German budget,” he said.

Reporting by Andrea Shalal; Editing by Leslie Adler

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