(MENAFN- Gulf Times) Air Berlin, Germany's second biggest airline, filed for insolvency on Tuesday after its main shareholder, Abu Dhabi-based Etihad Airways, withdrew financial aid for the loss-making carrier.
The move by the struggling airline forced the German government to step in to provide it with a temporary credit of 150 million euros (176 million dollars) to help it continue operating.
‘Air Berlin operations can be carried on to its full extent, as a result avoiding a discontinuation of the airline operation,' the Ministry for Economic Affairs said in a statement.
The Berlin-based court where the company filed for insolvency appointed Lucas Floether as trustee for the insolvency under self-administration later on Tuesday.
Air Berlin said that it had applied for insolvency after it was told by Etihad that the Abu Dhabi company was ending its financial support for the company.
‘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,' the Gulf carrier said in a statement on Tuesday.
Air Berlin has operated at a loss every year since 2008, except for 2012, when it sold off its frequent flyer programme.
Etihad acquired a 29.2-per-cent stake in Air Berlin in 2012, becoming its largest shareholder and providing injections of capital to keep the airline afloat.
Germany's biggest airline, Lufthansa, is now in talks with Air Berlin to take over sections of operations as part of a wider restructuring of Air Berlin, which ran up a loss last year of about 782 million euros and has debts totalling nearly 1.2 billion euros.
‘Negotiations are very advanced, particularly with Lufthansa,' German Transport Minister Alexander Dobrindt said on Tuesday in Berlin, noting that other companies are also looking to acquire parts of Air Berlin.
The transport minister wouldn't expect a deal between Germany's two largest airlines to result in antitrust problems, because Lufthansa isn't interested in buying the entire company, but rather only parts of the insolvent company.
Air Berlin said its Niki Luftfahrt GmbH and Leisure Cargo GmbH units were not part of the insolvency plan.
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