Air Berlin files for insolvency after Etihad withdraws financial support

Germany's second-biggest airline on Tuesday filed for insolvency after its majority shareholder decided to withdraw its financial support.

Air Berlin said in a statement that it had initiated proceedings at a court in Berlin-Charlottenburg to declare itself insolvent following the move by Abu Dhabi-based Etihad Airways -- the second-largest carrier in the UAE -- to pull the plug on the German company's funding.

"The board of directors of Air Berlin PLC has, after close evaluation, determined that Air Berlin PLC has no longer a positive continuation prognosis," the airline was quoted as saying by Efe news.

"The reason for this conclusion is that its main shareholder Etihad Airways PJSC has notified Air Berlin PLC of the fact that it will not provide any further financial support to the Air Berlin group," it added.

The company said that two members of the board of directors, who had been nominated to the board by Etihad, had resigned.

It said that the German federal government would support Air Berlin with a bridging loan of 150 million euros ($176.3 million) secured by a federal guarantee to maintain flight operations.

Meanwhile, Germany's main airline, Lufthansa, announced that it was already in negotiations with Air Berlin to take over parts of the group and was exploring the possibility of hiring additional staff.

In 2016, Air Berlin showed a record 782 million euros in losses -- a 75 per cent increase compared to 2015 -- which the company attributed to restructuring costs and depreciation.

--IANS

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