Air Berlin, Germany's second-largest carrier, has filed for
the German equivalent of bankruptcy, and the sale of Air Berlin parts are well
underway and could come to fruition in the coming weeks.
Air Berlin flights will continue to operate because the
German government extended a bridge loan of 150 million euros to the airline.
Air Berlin's filing to begin insolvency proceedings came
after losses of 782 million euros in fiscal year 2016 and 447 million euro in
fiscal year 2015. But the immediate cause of the bankruptcy was a decision by
Etihad, which owns 29.2% of Air Berlin, to offer no further financial support.
Etihad provided 250 million euros of funding to Air Berlin in April.
"Air Berlin's business has deteriorated at an
unprecedented pace, preventing it from overcoming its significant challenges
and from implementing alternative strategic solutions," Etihad said in a
statement Tuesday. "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."
Etihad's decision keeps with its current strategy of pulling
back from a series of investments in airlines that have wreaked havoc on the
Abu Dhabi-based airline. In May, Alitalia, which was 49% owned by Etihad, also
went into bankruptcy.
A statement issued jointly by Air Berlin and the German
government Tuesday said that negotiations between Air Berlin and Lufthansa, as
well as another unnamed airline, for the sale of Air Berlin parts is underway. In its own statement, Lufthansa verified that it is in
negotiations to take over portions of Air Berlin Group.
Air Berlin flies to eight U.S. destinations: New York, Boston,
Orlando, Miami, Chicago, Los Angeles, San Francisco and Fort Myers, Fla.