Air Berlin files for insolvency.


The news should not come as a surprise to many as the Berlin-based carrier had been struggling financially for some time already.Bloomberg reports that Air Berlin has had to file for insolvency after Etihad, its biggest investor, ended financial support.Air Berlin had posted net losses in eight of the previous nine years. The German government has agreed to keep Air Berlin operational with a Euros 150 million bridge loan for the time being. National airline Lufthansa says it is aAA*supporting the restricting efforts of the airline jointly with the German government.aAA[sup.1]

aAA*Lufthansa is already in negotiations with the Air Berlin Group to take over parts of Air Berlin. Lufthansa intends to conclude these negotiations successfully in due course.aAA[sup.1]

For its part, Etihad says: aAA*This development is extremely disappointing for all parties especially as Etihad has providedextensiveto Air Berlin for its previous liquidity challenges and restructuring efforts over the past six years.aAA[sup.1]

aAA*As a minority shareholder, Etihad cannot offerfundingthat would further increase our financial exposure. We remain open to helping find a commercially viable solution for all parties.We expect Air Berlin operations to continue during administration.aAA[sup.1]

There is a doubt if theseproceedings go smoothly so or not. Aviation consultant John Strickland says there could be problems. He says aAA*Air BerlinaAA[acute accent]s insolvency will be a battle royal. Lufthansa will want control of the market capacity while Ryanair will cry foul on market competition grounds.aAA[sup.1]

If all goes according to plan one would expect Air Berlin to operate its existing network for the time being. But changes can be expected once the busy...

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