Air Berlin has filed to commence insolvency proceedings at a local Berlin court after leading shareholder Etihad Airways withdrew its financial support.
Air Berlin said in a statement it will continue flying with the help of government loans. it has more than €2.7 billion euros ($3.2 billion) of losses in a little over six years and has net debt of €1.2 billion.
Air Berlin subsidiary, Leisure Cargo, a ‘virtual cargo airline’ which manages the carrier’s cargo business, says despite the financial situation of Air Berlin, its operations are not “negatively impacted” as all flights operated by airberlin and NIKI will continue as planned.
Etihad bought a 29 per cent stake in 2012, but it also announced huge losses of $1.87 billion for the 2016 financial year.
The German carrier says: “Etihad has notified Air Berlin of the fact that it will not provide any further financial support.” It added it has led it to conclude that there is “no longer a positive continuation prognosis.” Etihad’s two board representatives have resigned.
Lufthansa and another unidentified airline are “far advanced” with plans for a partial rescue and a deal could be finalised in the coming weeks. The government is providing a €150 million bridging loan through its Kreditanstalt fuer Wiederaufbau promotional bank.
The carrier says negotiations with Lufthansa and other partners regarding the acquisition of business units of Air Berlin are “far advanced and highly promising” and the negotiations may be finalised shortly.
Chief executive officer, Thomas Winkelmann says: “We are working tirelessly to achieve the best possible outcome for the company, our customers and employees, given the situation.”
An Etihad Airways statement says: “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 €250 million of additional funding to Air Berlin as well as supporting the airline to explore strategic options for the business. However, airberlin’s business has deteriorated at an unprecedented pace, preventing it from overcoming its significant challenges and from implementing alternative strategic solutions.
“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.
“We expect airberlin operations to continue during administration. We have a commercial relationship with airberlin across a range of areas, including codeshare operations, and we will support airberlin’s management during these difficult times.
“Germany is an important market for Etihad and Abu Dhabi, and we remain committed to providing comprehensive air links as a key enabler of trade and tourism.”
The UAE carrier also pulled the plug on funding Alitalia in May.
