German carrier Air Berlin filed for insolvency August 15 after its main shareholder Etihad Airways declared it would not be providing further financial support.
In a statement released the same day, Air Berlin, Germany’s second biggest airline and Europe’s seventh largest in passengers carried, said it has filed to start insolvency proceedings under self-administration at a local district court “in order to continue with the restructuring process that is already underway.”
It added that “the background of today’s announcement is the notification by Etihad that it no longer intends to provide airberlin with financial support.”
“The Federal Government is supporting airberlin with a bridging loan to maintain flight operations for the long-term,” it further stated.
The government will reportedly provide a EUR150 million (US$176 million) loan so the carrier can continue operations for at least three months.
The airline said that Lufthansa and other partners are also supporting its restructuring efforts. Lufthansa is said to be in talks to buy part of the Air Berlin group.
“Negotiations with Lufthansa and other partners regarding the acquisition of business units of airberlin are far advanced and highly promising. These negotiations may be finalised shortly,” the statement further said.
Air Berlin, which has accumulated debt for almost a decade, has suffered losses of EUR1.2 billion for the last two years, German media reported.
Air Berlin’s passenger numbers have been in a free fall; in July, the airline lost a quarter of its customers compared with the previous year.
The carrier has also been plagued by delays and cancellations, for which it has been forced to pay millions of euros in compensation.
Flights at Air Berlin’s low-cost subsidiary airline Niki are also continuing as normal.
Etihad Airways disappointed
Meanwhile, Etihad Airways, the national carrier of the United Arab Emirates, said it was extremely disappointed at the bankruptcy filing of Air Berlin.
“This development is extremely disappointing for all parties, especially as Etihad has provided extensive support to Air Berlin for its previous liquidity challenges and restructuring efforts over the past six years,” Etihad, which owns nearly 29.2% of Air Berlin, said in a statement.
Etihad said that in April this year, it provided Air Berlin EUR250 million in additional funding. However, Air Berlin’s business has deteriorated at an unprecedented pace, preventing it from overcoming its significant challenges and from implementing alternative strategic solutions.
Aviation analysts said the Berlin-based carrier failed to cope with the stiff competition from its main rival Lufthansa, which is fully privatized and stock-listed.
Photo: Ralf Manteufel
