Air Berlin, Germany's second-largest passenger carrier, filed for insolvency on Tuesday.
In a stock market filing Tuesday, Air Berlin said it had filed for bankruptcy protection after its main shareholder, Gulf carrier Etihad, had withdrawn funding for Air Berlin. Etihad, which owns nearly 30% of Air Berlin, said the developments were "extremely disappointing" but it could not keep injecting cash, after investing an additional €250m in April. Etihad provided it with €250 million in April but made a decision to pull further funding following a review of its European investments.
German Chancellor Angela Merkel also defended the government's loan for Air Berlin in an interview with four prominent German YouTube users. Lufthansa has said that it is supporting airberlin's restructuring efforts jointly with the German government and is in talks to take over parts of its operations.
Etihad concluded that it remains committed to providing "comprehensive air links" to Germany, and that would continue to support Air Berlin's management as a codeshare partner.
Etihad and its associate airlines sold the bonds two years ago, attracting orders for the 2020 issue at a yield of 6.875 percent.
Air Berlin may receive money from sales of slots [arrival and departure time in airports - TASS], Zypries said.
German carrier Deutsche Lufthansa AG said it might buy parts of its biggest national rival.
The German government has granted a bridge loan on 150 million euros ($176 million) to ensure Air Berlin flights will continue according to schedule for the next three months. In May, Italian flag-carrier Alitalia went into bankruptcy proceedings, leaving Etihad sitting on a loss of almost $2 billion.
Compared to budget carriers such as Ryanair and EasyJet, which are busy adding capacity and cutting fares, Air Berlin's cost base was simply too high. Etihad bought a 29% stake in 2012 as part of a plan to feed more passengers through its Abu Dhabi hub by building a network of minority investments, a strategy that it is now unraveling after itself suffering losses of United States dollars 1.87 billion in 2016.