German government steps in to keep Air Berlin flying

Passengers pass the Air Berlin check-in desk in the departures terminal at Dusseldorf airport May 2

It was propped up by its main shareholder, Etihad, but the Gulf airline announced it was no longer willing to invest.

The loan cash is expected to last for three months, the government said, after which the airline's future is uncertain.

Against this background, Air Berlin said that it "has today filed to commence insolvency proceedings under self-administration at the local district court of Berlin-Charlottenburg, in order to continue with the restructuring process that is already underway".

Germany's Air Berlin declared opening of the bankruptcy procedure, the company said on Tuesday.

Lufthansa intends to conclude these negotiations successfully in due time.

Air Berlin chief executive Thomas Winkelmann states: "We are working tirelessly to achieve the best possible outcome for the company, our customers and employees, given the situation".

"In April this year, Etihad provided €250 million of additional funding to Air Berlin as well as supporting the airline to explore strategic options for the business", an Etihad spokesperson said in statement. The company, which has popular routes to Israel, is in negotiations with Lufthansa and other firms to sell off parts of the airline. It is also extremely costly for Etihad, hard on the heels of Alitalia's Jun-2017 entry into administration.

Travellers in Germany will suffer higher prices as a result of the "Lufthansa monopoly", Ryanair said in a statement.

Lufthansa shares were up 4.7 per cent at 20.59 euros. "Air Berlin must proceed with transparency and provide all important information".

Air Berlin runs flights to over 150 destinations worldwide but has been loss-making for years. Etihad, the United Arab Emirates' carrier, bought a 29 percent stake in Air Berlin in 2012 as a means of funneling European passengers through its Abu Dhabi hub. "If acquired, Air Berlin's Dusseldorf airport slots would likely be a valuable asset to Lufthansa while freezing new entrants out of the "full" airport, unless the German authorities require slots to be surrendered to new entrants".

It added that two members of the board of directors, who joined after being nominated by Etihad, had resigned.

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