Pilots ground Air Berlin flights as bid deadline nears

By Victoria Bryan and Klaus Lauer

BERLIN (Reuters) - Insolvent Air Berlin canceled about 100 flights on Tuesday after pilots called in sick in unusually high numbers, potentially hampering an attempt to find investors to rescue Germany's second-largest airline.

Air Berlin filed for bankruptcy protection last month after its biggest shareholder, Etihad Airways, withdrew funding following years of losses. Potential investors have until Sept. 15 to submit binding offers for the German airline.

"We must return to stable operations. That is crucial in order to bring talks with investors to a successful conclusion," Chief Operations Officer Oliver Iffert said in an internal memo. "Today is a day that threatens the existence of Air Berlin."

About 100 flights had been canceled by late Tuesday morning after 200 Air Berlin pilots called in sick. Some short-haul flights at Lufthansa's budget airline Eurowings were also hit because it leases 33 planes with crews from Air Berlin.

An industry source said Air Berlin could lose 4 million to 5 million euros a day because of the cancellations.

Pilots union Vereinigung Cockpit (VC) said it was surprised by the absences and that it had not called on its members at Air Berlin to call in sick.

In a similar incident last year, German leisure airline TUIfly was forced to cancel flights after cockpit and cabin crew called in sick. The union Verdi, which represents cabin staff, said then its members were concerned that merger talks, which have since failed, could lead to job and pay cuts.

While a German government loan is helping keep Air Berlin alive, the carrier has also been forced to scrap some long-haul destinations from Sept. 25. Iffert said in the memo seen by Reuters that this was because a leasing company will no longer provide Air Berlin with 10 long-haul planes.

Germany's biggest airline, Lufthansa, is seen in pole position to acquire large parts of its rival and a decision on the bids come could as early as Sept. 21, three days before a national election.

One source has told Reuters that Lufthansa is interested in as many as 90 of Air Berlin's planes. That number includes the 33 being used by Eurowings, five already leased to Lufthansa's Austrian Airlines as well as planes used by Air Berlin subsidiary Niki, the source said.

Thomas Cook's German carrier Condor is preparing a bid for parts of Air Berlin, another source said, while media reports say easyJet (NYSE: EZJ) may want up to 40 planes.

Aviation investor Hans Rudolf Woehrl said he had submitted a bid for the whole of Air Berlin while German family-owned logistics company Zeitfracht has also expressed an interest.

Ryanair said on Tuesday that Air Berlin could be of interest to the Irish low-cost carrier but it didn't want to wait until after Lufthansa had finished talks.

(Additional reporting by Caroline Copley and Maria Sheahan; editing by Louise Heavens and David Clarke)

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