German carrier Air Berlin files for insolvency

Tammy Harvey
August 16, 2017

Air Berlin has today announced that they will be filing for insolvency after its main shareholder Etihad Airway said it would no longer provide financial support.

Lufthansa confirmed that it was in talks to take over parts of the business, while a source said EasyJet was the second airline referred to by the government as being in talks with Air Berlin.

With a loan from the German government to cover it on an operational front for the long-term, it is unlikely that Air Berlin will end up in the same situation as Alitalia.

Air Berlin said the talks with Lufthansa "and other partners" about acquiring its assets were already far advanced. "These negotiations may be finalised shortly", the statement added. Etihad, the United Arab Emirates' carrier, bought a 29 percent stake in Air Berlin in 2012 as a means of funneling European passengers through its Abu Dhabi hub.

"Under these circumstances, as a minority shareholder, Etihad can not offer funding that would further increase our financial exposure", Etihad said in a statement. Etihad, which owns nearly 30% of Air Berlin, said the developments were "extremely disappointing" but it could not keep injecting cash, after investing an additional €250m in April.

Berlin's economy ministry, meanwhile, said in a statement it would offer a transitional loan of €150 million ($175 million) to protect customers' rights.

Union ver.di called it a "severe blow" for the more-than 7,000 employees of Air Berlin.

Air Berlin made losses of €782m in 2016. Lufthansa is supporting the restructuring efforts of the airline jointly with the German Government.

Air Berlin said two members of its board of directors who had been nominated by Etihad had resigned.

In December, German rival Lufthansa's Eurowings and Austrian Airlines units reached a deal to lease 38 planes from Air Berlin. Etihad provided 250 million euros of funding to Air Berlin in April.

Etihad said it withdrew its funding after operations at Air Berlin deteriorated at a pace that was unprecedented the past few months. The state-owned Mideast carrier's links to Germany, which include a code-share agreement with Lufthansa, remain important and it is ready to assist in finding a "commercially viable" solution for Air Berlin, according to an emailed release.

Other reports by Ligue1talk

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