BREAKING: Air Berlin Bankrupt

Carrier files for administration under $1.41 billion debt load

German carrier Air Berlin will seek protection under European insolvency laws, after shareholder Etihad Airways said they would no longer financially support the air line. ABC News reports the carrier has filed for the equivalent of bankruptcy protection, carrying approximately $1.41 billion in debt.

In order to stay in the air, the air lines will receive a $177 million loan from the German government to continue operations during the summer months. In a statement from the German Economy and Transport Ministries, flying passengers back to the country aboard Air Berlin “would not have been otherwise possible.”

The decision to go into insolvency came after major shareholder Etihad declined to continue financially supporting Air Berlin. The Middle East carrier owns 29.2 percent of Air Berlin and announced the carrier as a charter member in their alliance, Etihad Airways Partners.

“This development is extremely disappointing for all parties,” Etihad said in a press release. “Especially as Etihad has provided extensive support to Air Berlin for its previous liquidity challenges and restructuring efforts over the past six years.”

While Air Berlin decides how to restructure, German flag carrier Lufthansa has announced they may step in to assist their competitor. The air line currently leases 38 Air Berlin aircraft for use on Austrian Airlines and low cost carrier Eurowings, but could substantially increase a hold over the company.

“Lufthansa is already in negotiations with Air Berlin to take-over parts of the Aer Berlin Group and is exploring the possibility of hiring additional staff,” Lufthansa Group said in a press release. “Lufthansa intends to conclude these negotiations successfully in due time.”

Four days prior to the insolvency filing, Air Berlin announced “a positive balance over the past ten months,” while introducing an expansion of Business Class seating on intra-Europe flights. FlyerTalk has reached out to Air Berlin for a statement, but has not received a response as of press time.

Article Source