Air Berlin needs €450m to stem the losses of 2013

[Inquirer]

According to De Tijd, Air Berlin needs 450 milion euro in fresh money after it lost some 315m euro in 2013.
For that purpose, the German airline is planning to offer convertible obligations to the public of which Etihad has already agreed to buy some 300 million euro worth of.
http://www.tijd.be/nieuws/ondernemingen ... .art?ckc=1

I am wondering:
A) who is going to be willing to buy the rest, given the lack of a clear turn around plan at Air Berlin?
B) how likely is it that the EC will start to investigate the issue of Etihad effectively running EU "partner" airlines through holding a de facto majority stake in it (shares, loans, obligations...)?
If I am not mistaken, the Alitalia case is raising quite some eyebrows at the EU already (with the Italians pushing very hard for a positive judgement), but a second case in parallel may just force the EC to speak out more rapidly that we are used to from them.

[sn26567]

In English: http://www.reuters.com/article/2014/04/ ... NE20140427

As you rightly wonder, the EU (and Switzerland as well) has already started to investigate the Etihad ownership of minority shares in EU airlines (and in Darwin for Switzerland) to check whether their activities do not go beyond a passive ownership of a minority shareholding. In fact, the EU wants to know if Etihad is actually running these airlines or at least have a final say in the decisions taken by these airlines.

"Air Berlin said on Sunday its recapitalisation would not change its ownership structure." (i.e. 29.2% EDtihad, 12% the Turkish Sabanci family). And what if Etihad converts its bonds into shares?

"Air Berlin slumped to a 2013 loss before interest and tax (EBIT) of 231.9 million euros". That will eat most of the new bond issue!

[sean1982]

Wasn't that one of the airlines you called "firmly in the drivers seat?"

[Inquirer]

Wasn't that one of the airlines you called "firmly in the drivers seat?"

No I wasn't?
Where was that idea coming from?

[Flanker2]

I'm still wondering what EY's strategy is in all of this.
They are throwing with money here and there in Europe, they thought that they could come in and from one day to the other paint all their airplanes into EY hybrid liveries to build a "Etihad Group", Trojan horse style.

This is Europe after all, and unless you own all the key politicians, you can't do anything.

For me, EY don't have a plan. They are barely profitable and with their brother company hubbing 100km further, they are poised to fall on their faces together.
Even if they use this airline as a new way of marketing their oil more direcly to make more profits, the day that the oil well dries up, there won't be much left to continue on.

I think that long-term, ie 20-30 years or so, EK and EY will join the ranks of Pan Am and TWA, as glamorous airlines that once existed.

[Scoezie]

Dear Flanker2,

I am reading this forum every day and it makes me happy to have someone as you sharing your knowledge to the world. You seem to have figured out the whole airline industry and knowing what will happen in 20-30years from now. Maybe you should quit your job and apply immediately for CEO of a big airline?

I believe your opinion about the Middle-Eastern carriers is completely wrong. Look at the catchment area these airlines are operating. There is a huge amount of passengers which salaries are increasing and starting to travel. Furthermore guess which carriers are taking the huge flows from and to the Indian Sub-Continent? My point is, money or not, you need passengers to fly on your airline. Rest assured that the load factor of Middle-Eastern carriers are higher than most European ‘legacy’ airlines. I would invite you to take the experience to work for a Middle-Eastern airline; I think you would be surprised how professional they are.

Regarding Air Berlin, the issues with that airline are structural and originated from bad decisions in the past (too fast growth, un-balanced network, questionable take-overs, strong unions). Furthermore they have issues with their market positioning. Also Berlin is not the strongest economical hub in Western Europe. All these factors combined make it very difficult to turn around an airline. Good news is, the passengers (demand) is there, so once solving these structural issues, I am confident that Air Berlin will operate healthy in a foreseeable future. It is unrealistic to think that you can turn around an airline immediately once oil money arrives. It is not that LH managed to turn around OS immediately, failing in making BD profitable and for SN we have to wait and see.

But hey, just my two cents

[Air Key West]

I'm still wondering what EY's strategy is in all of this.

My guess is that their strategy is probably the following : since they cannot fly to all cities (especially the small and medium-sized ones in Europe) from/to AUH, they want to secure partners that will allow for smooth connections to most cities in Europe (large AND small). In spite of partnerships (still embrionic, I think) with AF/KL, they want to have THEIR OWN (ok, 49 % or so) of a number of European airlines to make sure nobody will stand them up.

As to the airlines which in 20 years might join the ranks of Pan Am and TWA, I have to disagree with you. My guess (I say "guess") is that LH and consorts are the more likely candidates or at least they will be dwarfed compared to TK and the 3G. But that what my cristal ball tells me. No concrete facts to prove it, yet.

[Inquirer]

I'm still wondering what EY's strategy is in all of this.

Whereas I can somehow see the point of investing in a European partner in order to add European regional destinations which they themselves will never serve non-stop from their home town, it goes beyond me why they'd want to invest in an airline which allows them to do not only that, but also serves many other routes which are of no added benefit to them and which aren't even profitable to start with?
And not just once then (Air Berlin), but twice (Alitalia)?

My personal feeling is they initially had a good idea to start off with, but it got squandered during the market prospection because of the megalomania their country seems to suffer from and which drove them into buying into a big airline, rather than just a modest feeding airline which would have been a much better option, IMHO.

This is Europe after all, and unless you own all the key politicians, you can't do anything.

Etihad bought into a privately owned company on their own initiative, knowing that there are very strict rules on foreign ownership: there's not a politician in sight at Air Berlin, so the fact they seemingly can't turn them around despite all the money thrown at it neither has nobody but themselves to blame and this is probably the main reason why they haven't cut their losses yet:failure just isn't an option to them, culturally and politically.

[Boeing767copilot]

Air Berlin names new CEO in push for return to profit


German airline Air Berlin has named a new chief executive to take over a restructuring programme as it tries to return to profit.

http://in.reuters.com/article/2014/11/0 ... KH20141103