Air Berlin faces turbulence after filing for insolvency

EUROPEAN airline Air Berlin has filed for administration after its largest shareholder Etihad refused to plough more cash into the ailing business.

The Gulf-based company said the development was “extremely disappointing” especially as it had provided extensive support to Air Berlin over the last six years, notably with a €250m (£227m) cash injection in April this year.

Air Berlin’s troubles come as it, like rival Alitalia which also filed for administration this year and is also partowned by Etihad, has struggled to fight off competition from low-cost operators such as easyjet and Ryanair.

Air Berlin has also been dogged by delays and cancellations, which have in turn has hit passenger numbers, which fell by 24pc year on year in July from 3.22m to 2.44m.

Etihad, which has a 29.2pc stake in the carrier, said Air Berlin’s business had “deteriorated at an unprecedented pace, preventing it from overcoming its significant challenges”. It added: “Under these circumstances, as a minority shareholder, Etihad cannot offer funding that would further increase our financial exposure.”

The airline is expected to continue operating during the administration process thanks to a €150m loan from the German government. It is understood that rival Lufthansa is in talks to buy part of Air Berlin Group, which owns Air Berlin and low-cost carrier Niki.

Ryanair last night argued that Air Berlin was being prepared for Lufthansa’s takeover in contravention of competition rules, and said it had lodged a complaint with EU and German regulators.

But Germany’s transport minister Alexander Dobrindt said that he was confident there would be no anti-trust issues because the business would be sold off in bits.