Air Berlin’s largest shareholder, Etihad Airways, has withdrawn its financial support, causing the company to resort to government loans to remain in the air for another three months.
Air Berlin has filed for insolvency after its largest shareholder, Etihad Airways, withdrew financial support.
Air Berlin, Germany’s second-largest airline and the seventh-largest in Europe, has filed for insolvency after Etihad Airways, the company’s leading shareholder, withdrew its financial support.
In a statement to American Shipper, Etihad said it withdrew its support after Air Berlin’s operations “deteriorated at an unprecedented pace in recent months,” preventing alternative strategic solutions.
“This development is extremely disappointing for all parties, especially as Etihad has provided extensive support to airberlin for its previous liquidity challenges and restructuring efforts over the past six years. In April this year, Etihad provided EUR 250 million of additional funding to airberlin as well as supporting the airline to explore strategic options for the business.
“Under these circumstances, as a minority shareholder, Etihad cannot offer funding that would further increase our financial exposure. We remain open to helping find a commercially viable solution for all parties,” said Etihad.
Air Berlin is now the second European airline to announce bankruptcy in four months after Italy’s Alitalia went under in May, according to Bloomberg. However, Air Berlin has assured customers that all flights operated by the airline will continue as planned and bookings remain valid.
“We are working tirelessly to achieve the best possible outcome for the company, our customers and employees, given the situation,” said CEO Thomas Winkelmann.
The airline has more than 2.7 billion euros (U.S. $3.2 billion) of losses in the last six years and a net debt of 1.2 billion euros. Etihad originally bought a 29 percent stake in 2012 as part of a network of minority investments, however, the airline itself suffered losses of $1.87 billion in 2016, according to Bloomberg.
Thanks to government loans, Air Berlin will continue flying through November, and larger German rival Deutsche Lufthansa has said is may buy parts of Air Berlin as a result.