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Published: Thu, August 17, 2017
Economy | By Melissa Porter

Airberlin Files for Bankruptcy Protection; Bumped Passengers Fall — Air Travel

Airberlin Files for Bankruptcy Protection; Bumped Passengers Fall — Air Travel

Air Berlin, Germany's second-largest airline, filed for bankruptcy protection on Tuesday after key shareholder Etihad Airways withdrew funding following years of losses. Talks with Deutsche Lufthansa and other parties regarding disposals of assets are continuing, the airline said.

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".

Despite this announcement, it has said that all current books are still valid and that the German government will be providing a guarantee for 150 million euros, through its development bank will allow it to continue operations while talks continue.

A spokeswoman for Germany's Economy Ministry said it was "absurd" to claim that the rescue package had been staged.

Ryanair has lodged a complaint with the German regulator, the Bundeskartellamt, and the European Commission. In addition to ongoing negotiation "to take over parts of the Air Berlin group", Lufthansa says it is "exploring the possibility of hiring additional [Air Berlin] staff". Lufthansa controls the capacities of its most important competitor, sets the prices and decides where aircraft will start. Eurowings and Austrian Airlines are also owned by LHG.

News agency Bloomberg estimates that Air Berlin has burnt through nearly €2 billion in six year.

Air Berlin made losses of €782m in 2016.

"All this is down to prevent Ryanair growing in Germany, but it won't stop us", Michael O'Leary told Reuters in a telephone interview on Wednesday. Lufthansa's priority will be to keep Ryanair out.

Ryanair has been targeting the German market, with new routes to and from Frankfurt.

Following the announcement that Air Berlin filed for bankruptcy protection, low-priced rival Ryanair lodged complaints with European and German competition agencies, the company said in a statement.

Shares in Air Berlin plunged 34 percent on Tuesday to 51 euro cents.

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.

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