Germania Bankruptcy: Can passengers claim compensation for their flight cancellations?

Berlin-based airline Germania filed for bankruptcy on February 5. As a result, all of its flights have been cancelled. Unfortunately, this may spell bad news for passengers who have booked a flight with the airline or have submitted claims for Germania compensation.

 

Read on to learn more about Germania’s bankruptcy and about the impact that this step may have on the airline’s customers.

 

What next for passengers with upcoming Germania flights?

Direct bookings

Unfortunately, the carrier has stated that it would not cover the replacement flights of passengers who have booked their Germania flights directly. In addition, Germania is not expected to provide a refund to its customers for their cancelled flights.

Passenger’s best option would be to contact their insurance provider to see if their travel insurance covers airline failures.

While airline bankruptcies are somewhat rare events, the impact of such an event on your plans may be massive. This is why we would always recommend purchasing travel insurance.

 

Bookings through a third-party tour operator

However, if you have purchased a flight as part of a package holiday through a third-party, you may be in more luck.

Germania advises its customers to contact their tour operators in order to make alternate arrangements. In all likelihood, if you decide to cancel your holiday, the tour operator would be required to reimburse you for your expenses.

 

Claiming Germania Flight Delay Compensation

According to EU Regulation 261/2004, passengers may be entitled to compensation in case of a flight delay or cancellation. The regulation applies to all flights departing from an EU airport or operated by an EU carrier (including Germania).

Germania’s bankruptcy, however, will likely present a severe impediment to claiming compensation for delays and cancellations.

Since Germania has ceased operations, there will be no available staff to process any flight delay compensation claims. Therefore, it may be futile to submit a claim if your flight has been cancelled due to Germania’s insolvency.

Unfortunately, even passengers, whose compensation claims have been approved may not be in the position to receive their reimbursement. German law restricts Germania’s ability to cover its debts before the insolvency proceedings are over.

 

What led to Germania’s bankruptcy?

Following Air Berlin’s bankruptcy, Germania is the second major German airline to file for insolvency in recent years. Unlike, Air Berlin, however, Germania is unlikely to receive a loan from the government to cover its short-term operations.

Times were not always rough at the airline, however. The number of scheduled seats had been steadily increasing and by 2018, Germania was serving more than 4 million passengers a year.

Germania’s bankruptcy is, reportedly, the result of a short-term financial squeeze. Only a month before Germania's bankruptcy, it seemed like the airline had escaped the financial tremors narrowly. The airline required €20 million at the turn of the year and in January 2019, Germania’s management said there was “serious interest” from investors, which would allow them to continue operations.

 

In a statement published on their website, the airline says that the bankruptcy follows a rise in fuel prices and a drop of the euro against the US dollar. Coupled with delays in the phasing of seven new aircraft into Germania’s fleet and “an unusually high number of maintenance events” the airline was unable to resist the financial pressures which ultimately caused Germania’s bankruptcy.

Karsten Balke, Germania’s CEO has also thanked the airline’s employees for their commitment “to secure reliable and stable flight operations”.

The statement also reads that Swiss airline Germania Flug AG and Bulgarian Eagle would not be affected by Germania’s bankruptcy.

 

Challenges Ahead for Airlines

Air Berlin, Small Planet, VLM, Primera, Skywork, Cobalt, the list goes on. Germania’s bankruptcy is the latest in an ever-expanding list of airlines ceasing operations in recent years. Flybe was recently acquired after an insolvency scare. Shifting currency and fuel prices have exerted significant pressure on the short-haul market.