Airberlin enters insolvency after Etihad cuts funding

By Hannah Edensor


Germany’s second biggest airline, airberlin, has officially filed for insolvency after primary shareholder, Etihad Airways, pulled the plug on its financial support.

Airberlin has filed to commence insolvency proceedings under self-administration in order to continue with the restructuring process that is already underway.

According to a statement released by airberlin, “The Federal German Government, Lufthansa and other partners are supporting airberlin in its restructuring efforts.

“The Federal Government is supporting airberlin with a bridging loan to maintain flight operations for the long-term.”

Germany’s Economy Ministry and Transport Ministry said in a statement, per news.com.au, that the airline would get a loan of 150 million euros ($A226 million) so that it can continue flights for the time being.

Per news, the ministries said, “We’re in a time when many tens of thousands of travellers and vacationers are in multiple international holiday spots.

“The return flights of these travellers back to Germany with Air Berlin would not have been otherwise possible.”

This means:

  • All flights operated by airberlin and NIKI will continue as planned
  • The flight schedule remains valid
  • Bookings remain valid
  • All flights can still be booked

Etihad Airways released a statement this morning claiming its investment in airberlin was no longer viable after its business has “deteriorated at an unprecedented pace”.

“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,” the statement read.

“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.

“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.”

Negotiations with Lufthansa and other partners regarding the acquisition of business units of airberlin are well underway and, according to airberlin, are “highly promising”.

These negotiations may be finalised shortly.

Thomas Winkelmann, CEO of airberlin, said, “We are working tirelessly to achieve the best possible outcome for the company, our customers and employees, given the situation.”

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