Airberlin Files for Bankruptcy Protection; Lufthansa Could Buy Airline

airberlin

Germany-based airline airberlin has filed for bankruptcy protection, and Etihad Airways, the airlines codeshare partner and largest shareholder, has announced that it will not provide any further funding.

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, Etihad said in a written release.

Etihad said that it provided EUR 250 million in additional funding to airberlin this past April, but that since then the airlines business has deteriorated at an unprecedented pace, preventing it from implementing alternative solutions.

Under these circumstances, as a minority shareholder, Etihad cannot offer funding that would further increase our financial exposure, Etihad said. We remain open to helping find a commercially viable solution for all parties.

Etihad said that it expects airberlins operations to continue during the bankruptcy process.

Fellow German airline company Lufthansa Group (LHG) reports that it is in negotiations with airberlin to take over parts of its business.

Lufthansa is supporting the restructuring efforts of the airline jointly with the German Government, LHG said in a statement on its website. This also ensures that all aircraft that are currently operated by airberlin under a wet lease agreement for Eurowings and Austrian Airlines will continue operating as before. Eurowings and Austrian Airlines are also owned by LHG.

LHG was the first airline group to implement a GDS surcharge back in 2015 in a bid to drive bookings to direct channels, such as its website and call centers. At the time the airline group argued that the cost of distribution through GDS was higher than through other channels.

According to sources in the German government cited by Deutsche Welle, the government will support airberlin with a 150 million Euro loan (approximately $176.2 million), which will also help ensure that the airline can continue operating scheduled flights.

Airberlin has lost 1.2 billion euros over the past two years, according to Deutsche Welle, and the budget carrier has only posted a profit in two quarters since 2008. It began a restructuring plan that eliminated approximately one in seven of its workforce, which was followed by a series of flight cancellations and delays that caused many passengers to turn away from the airline. Through July, airberlin passengers were down 16 percent year over year.

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