Air Berlin, Germany’s second largest but crisis-stricken airline that has not been profitable since 2008, declared insolvency on August 15, 2017. Thanks to a bridge loan of 150 million euros from the German government, the airline will continue to remain in operations for another 3 months. Lufthansa already in negotiations with Air Berlin to purchase parts of the Air Berlin Group.
As Deutsche Welle and media around the world reported on August 15, 2017, that Air Berlin had filed for bankruptcy protection in a stock market filing after its main shareholder, Gulf carrier Etihad, had withdrawn funding for Air Berlin.
Under these circumstances, Air Berlin had come to the conclusion that there was no “positive prognosis for continuing the airline,” the filing said. It added that two members of the board of directors, who joined after being nominated by Etihad, had resigned.
Etihad said in a statement Tuesday Air Berlin’s filing for insolvency was “disappointing” for both sides. It noted that it had granted ample financial aid to the carrier over the past six years, with Air Berlin receiving another 250 million euros ($293 million) in April to keep afloat.
However, the airline requested the right to carry out insolvency proceedings under its own management, which would “facilitate negotiations with Lufthansa and other interested parties about a possible sale of Air Berlin operations,” the airline said.
The insolvency comes with thousands of Germans enjoying summer holidays abroad on flights booked with the airline. Therefore, the German government has granted a bridging loan of 150 million euros ($176 million) to allow Air Berlin to keep its planes in the air for three months and secure the jobs of its 7,200 workers in Germany while negotiations continue.