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Air Berlin enters administration, Ryanair furious

August 17, 2017 Headline News No Comments Email Email

Air Berlin, Germany’s second-biggest airline, has filed for insolvency administration, with Lufthansa likely to buy in and some reports naming EasyJet as another potential buyer.

Flights will continue unaffected, subsidised by a transitional loan of EUR 150 million (AUD 225 million) from the German government.

Air Berlin has seen its debts climb for almost a decade. The BBC reported the carrier became insolvent “after its main shareholder Etihad declared it would not be providing further financial support”.

A statement issued by Etihad, however, expressed surprise and disappointment at the development.

The Etihad statement read:

“We have been informed that airberlin has filed for administration. 

“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. 

“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.”

Air Berlin reported a record loss of EUR 782 million euros (AUD 1.17 billion) in 2016.

The airline’s main rival, Lufthansa, is in talks to buy part of the Air Berlin Group. The Guardian has named EasyJet as another potential buyer, saying EasyJet “would be keen to acquire slots to boost its small presence in Germany”.

Ryanair, meanwhile is hopping mad over what’s happening to Air Berlin.  It has lodged official complaints.

A Ryanair spokesman said: “This is clearly being set up for Lufthansa to take over Air Berlin, which will be in breach of all known German and EU competition rules. Now even the German government is supporting this Lufthansa-led deal with EUR 150 million of state aid. German customers and visitors will suffer higher air fares to pay for this Lufthansa monopoly.”

Critics say Air Berlin tried to be too many things to too many people. In July, the airline lost a quarter of its customers compared with the previous year, the BBC reported.

Flights at Air Berlin’s low-cost subsidiary airline Niki are also continuing as normal.

Written by Peter Needham

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