February 5, 2019

Another German carrier goes bust

Germany’s third airline to expire within 18 months, Germania has filed for insolvency after plans to grab market share backfired.

Privately owned Germania filed for insolvency on 4 February, shutting down operations and grounding its fleet of 37 aircraft.

The Berlin-based airline, which served four million passengers in 2018, blamed the demise on increases in fuel prices, the euro’s drop against the US dollar, delays in procuring new aircraft and maintenance problems.

Germania also suffered from cutthroat competition from low-cost carriers, such as Ryanair, Easyjet and Lufthansa’s Eurowings, which have flooded the market with cheap flights.

Lufthansa and subsidiaries could benefit most from the bankruptcy, as its routes overlapped most with those of Germania.

After rival Air Berlin went bankrupt in August 2017, Karsten Balke, the carrier’s founder, owner and chief executive officer (CEO), focused on expanding Germania’s fleet to fill gaps left by the demise of Air Berlin, especially in the holiday market.

Germania, which carried out flights for holiday operators Tui and Thomas Cook, will likely be dismantled.

An attempt by Balke to restructure the company under German bankruptcy protection has been rejected by a Berlin court in Berlin.

The German subsidiary of Lithuanian airline Small Planet went bust in September 2018, unable to cope with massive claims by passengers for delayed and canceled flights over the summer.

Other small airlines, such as VLM in Belgium and Skywork in Switzerland, also ceased operations last year, along with Denmark’s Primera Air and Cyprus’ Cobalt Air.

Germania’s grounding will especially hit the smaller airports, including Bremen and Dresden, where the airline operated.

Rivals Lufthansa and Ryanair will only be interested in snapping up slots at larger airports, such as Nuremberg.

Other ailing airlines have narrowly escaped folding this year, such as UK-base Flybe, which a consortium led by Virgin Atlantic is bidding to buy.

Even low-cost airline Ryanair has felt the pressure, revealing on 4 February plans to restructure after a net loss of €20 million ($22 million) in the last three months of 2018, the carrier’s first quarterly loss since 2014.