Etihad terms Air Berlin's insolvency move 'extremely disappointing'

Dubai - In April this year, Etihad provided 250 million euros in additional funds to the airline, as well as offer support for the airline to "explore strategic options" for the business.

Air Berlin's Tuesday filing for insolvency is "extremely disappointing", Etihad Airways said in a statement.

On Tuesday, discount carrier Air Berlin filed for insolvency in a local Berlin court.

"We have been informed that Air Berlin has filed for administration," Etihad said in a statement. "This development is extremely disappointing for all parties, especially as Etihad has provided extensive support to Air Berlin for its previous liquidity challenges and restructuring efforts over the past six years."

In April this year, Etihad provided 250 million euros in additional funds to the airline, as well as offer support for the airline to "explore strategic options" for the business.

"However, Air Berlin's business has deteriorated at an unprecedented pace, preventing it from overcoming its significant challenges and from implementing alternative strategic solutions," Etihad added.

"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 noted that Air Berlin operations are expected to continue during administration, and that the Abu Dhabi-based carrier has a commercial relationship with Air Berlin across a number of areas, including codeshare operations.

"We will support Air Berlin's management during these difficult times," the statement added. "Germany is an important market for Etihad and Abu Dhabi, and we remain committed to providing comprehensive air links as a key enabler of trade and tourism."

Saj Ahmad, an analyst with the London-based StrategicAero Research, said that Air Berlin's collapse "underscores the immense difficulties and challenges that Etihad endured in trying to get the airline to restructure, change and become a viable competitor to Lufthansa".

Ahmad added that it appears that Etihad is "re-evaluating its position and is probably better off concentrating on its own organic expansion, as opposed to being side-tracked by equity stakes that have not delivered the rewards that had been envisioned".

"With that in mind, the new leadership at Etihad, in my mind, has to wipe the slate clean from this sort of troublesome exposure and get back to showcasing Etihad's premium offerings, which are undeniably beyond the rest of it's rivals," he added. "It's a bad day in the Etihad office, that's for sure, but now Etihad is arguably free from Air Berlin, it can get back to business as it looks to turn around its losses."

business@khaleejtimes.com