German Airline folds after Etihad pull plug

In today’s ever challenging economic climate, many airlines are finding it increasingly difficult to operate a profitable business.

This week, Germany’s second biggest airline, Air Berlin has been forced to file for bankruptcy after Abu Dhabi’s Etihad Airways stated that they would not provide the finance needed for another bailout. This is despite Etihad being Air Berlin’s leading shareholder.

However, passengers needn’t panic just yet as the well known airline has announced that they will continue to fly until further notice, thanks to a 150 million euro loan from the German Government.

The loan means that Air Berlin’s 7,200 employees will be able to keep their jobs for the time being, whilst the company’s chief executives focus all of their efforts on strategically restructuring the company.

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In response to the announcement Etihad has released a statement to the press stating: "Air Berlin's business has deteriorated at an unprecedented pace, preventing it from overcoming its significant challenges and from implementing alternative strategic solutions.

"Under these circumstances, as a minority shareholder, Etihad Airways cannot offer funding that would further increase our financial exposure."

The announcement is a major setback for Etihad Airways after the company has invested just over 1.8 billion euros in the airline. Over the years, Etihad Airways has invested in a number of Airlines however, despite their best efforts; it has not always had a profitable outcome.

For example, earlier this year, Etihad were left with no other choice put to pull out of an agreement with Italian national carrier, Alitalia, which forced the Italian airline to begin administration proceedings. The Italian Government is in the midst of trying to find a new buyer for the airline.

This is not the first time Air Berlin has struggled to turn a profit in recent years. Despite flying 2 million passengers to all corners of the world, every single month, Air Berlin have found it increasingly difficult to keep their head above water, which has continued to put the future of the airline in jeopardy.

This is mainly due to increased competition form other bigger low cost airline carriers offering a no frills service to similar destinations. These include popular European carriers such EasyJet and Ryanair.

Air Berlin currently fly to more than 150 destinations worldwide, including many long haul destinations such as New York, Miami, Los Angeles and Chicago.

If you are travelling with Air Berlin in the foreseeable future and have concerns about your travel arrangements, you should contact the company directly for further information.