FRANKFURT (AFP) – Asian tourism and casino giant Genting's shipbuilding subsidiaries in Germany filed for bankruptcy on Monday (Jan 10), which one union leader described as a "dark day" for the country's dockyards.
With travel still severely restricted during the Covid-19 pandemic, particularly in Asia, the company has seen demand for huge cruise ships or luxury mega yachts dwindle.
The cruise ship industry has also been shaken by a spate of recent coronavirus outbreaks on liners despite increased health measures, giving new headaches to the pandemic-hit sector.
MV Werften on the Baltic Sea coast and Lloyd Werft in Bremerhaven on the North Sea coast declared themselves insolvent, local courts told AFP.
The larger subsidiary MV Werften took the step after failing to secure funding for the completion of the Global One mega liner, already 80 per cent of the way through construction, according to the company.
Designed to carry close to 10,000 passengers, the huge ship had been due to leave the shipyard in 2021 – but the pandemic had knocked the company's timetable off course and crimped its budget.
Around €600 million (S$921.7 million) is necessary to finance the completion of the vessel, for which the shipbuilder has been seeking support from the government.
The decision to declare bankruptcy came after lengthy discussions with officials in which the two sides "clearly have not found common ground", a spokesman for MV Werften said shortly before the filing was made.
The state had asked MV Werften owner Genting to put forward 10 per cent of the capital, government coordinator for the maritime economy Claudia Mueller said in a press conference.
"On this issue, there was no agreement between Genting and the federal government," Ms Mueller said.
The Global One sits in Wismar, one of MV Werften's three shipyards along the Baltic coast of Mecklenburg-Western Pomerania, where it employs around 2,000 people.
The collapse of one of the biggest employers in the region poses an early challenge for Chancellor Olaf Scholz's newly formed government.
"It is very important to us to keep the know-how where it is," Ms Mueller said, adding that the government saw "big potential" for the development of offshore energy.