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UAE-backed German airline declares bankruptcy

August 16, 2017 at 8:59 am

Air Berlin aircrafts seen in Germany [Wikimedia/calflier001]

The United Arab Emirates (UAE)’s Etihad Airways announced yesterday that it would halt its financial support for Germany’s Air Berlin, which recently filed for bankruptcy after many years of losses, Reuters reported.

The German airline’s move marks the second failure of a major European airline in four months after the Gulf carrier pulled the plug on funding Italy’s Alitalia SpA in May.

Germany’s second largest airline said that it is currently in talks with rival Lufthansa, Germany’s biggest carrier, and another unidentified airline to take over some of the company’s operations.

The German government has granted a €150 million ($176 million) bridging loan to Air Berlin to keep its flights running for another three months, at a time when many Germans are still on holiday. The loan will also help secure the jobs of the company’s 7,200 employees.

Read: UAE email leaks reveal Emirati ambitions

Air Berlin has long battled for survival, booking losses amounting to €1.2 billion over the past two years and relying on cash infusions from Etihad.

Etihad, which holds a 30 per cent stake in Air Berlin, said that the carrier’s business “deteriorated at an unprecedented pace, preventing it from overcoming its significant challenges and from implementing alternative strategic solutions.”

The Emirati national carrier noted that the announcement of bankruptcy was “extremely disappointing for all parties”, especially after the six years of financial support it had provided to the airline, stressing that it could not continue pumping money into a “loss-making business”.

“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,” Etihad said.