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Air Berlin loses Etihad's support, pushing carrier into insolvency
DISCOUNT carrier, Air Berlin has filed for insolvency after its main shareholder Etihad Airways withdrew its financial support. However, the German airline said it will continue flying with the help of government loans.
Air Berlin has stacked up EUR2.7 billion (US$3.2 billion) in losses over six years and has a net debt of EUR1.2 billion. Etihad acquired a 29 per cent stake in Air Berlin in 2012 as part of a plan to feed more passengers through its Abu Dhabi hub by building a network of minority investments, a strategy that it's now unravelling after suffering losses itself of $1.87 billion in 2016, reported Bloomberg.
"Etihad has notified Air Berlin of the fact that it will not provide any further financial support," the German carrier said in a statement.
Etihad said that it withdrew funding after Air Berlin's operations deteriorated at an "unprecedented pace" in recent 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.
Deutsche Lufthansa AG said it may buy parts of Air Berlin, its main national rival. Lufthansa and another unidentified airline are "far advanced" with plans for a partial rescue and a deal could be finalised in coming weeks, Air Berlin and Germany's economic ministry said in separate statements.
The government is supporting the process by providing a EUR150 million bridging loan through its Kreditanstalt fuer Wiederaufbau promotional bank.
Air Berlin has stacked up EUR2.7 billion (US$3.2 billion) in losses over six years and has a net debt of EUR1.2 billion. Etihad acquired a 29 per cent stake in Air Berlin in 2012 as part of a plan to feed more passengers through its Abu Dhabi hub by building a network of minority investments, a strategy that it's now unravelling after suffering losses itself of $1.87 billion in 2016, reported Bloomberg.
"Etihad has notified Air Berlin of the fact that it will not provide any further financial support," the German carrier said in a statement.
Etihad said that it withdrew funding after Air Berlin's operations deteriorated at an "unprecedented pace" in recent 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.
Deutsche Lufthansa AG said it may buy parts of Air Berlin, its main national rival. Lufthansa and another unidentified airline are "far advanced" with plans for a partial rescue and a deal could be finalised in coming weeks, Air Berlin and Germany's economic ministry said in separate statements.
The government is supporting the process by providing a EUR150 million bridging loan through its Kreditanstalt fuer Wiederaufbau promotional bank.
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