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AFP
Frankfurt am Main
Germany's Air Berlin on Tuesday announced it had filed for bankruptcy after its main shareholder Etihad Airways said it would not plough any more cash into the struggling airline.
The German government said it was providing a bridging loan of 150 million euros ($175 million) to keep the carrier's flights going at a time when many Germans are still on holiday.
German rival Lufthansa said in a separate announcement it was in talks with Air Berlin to take over parts of the group.
Air Berlin has long battled to stay afloat, booking losses amounting to 1.2 billion euros over the past two years and relying on cash infusions from Etihad for survival.
The German airline said in a statement that it had filed for insolvency with the court of Berlin-Charlottenburg after Etihad"notified Air Berlin PLC of the fact that it will not provide any further financial support to the Air Berlin group".
Etihad, which holds a 29-percent stake in Air Berlin, said the development was"extremely disappointing"but that it could no longer justify further funding after providing an additional 250 million euros in April.
"Air Berlin's business has continued to deteriorate at an unprecedented rate, preventing it from overcoming its significant challenges,"it said.
German Economy Minister Brigitte Zypries told a hastily assembled press conference that the government was assisting Air Berlin with a bridging loan to prevent passengers from being stranded during the holiday season.
"To keep Air Berlin's flight operations going, the government has decided to grant a bridging loan for 150 million euros,"she told reporters. The money should be enough to keep Air Berlin running"for three months", she added.
In a bid turn to the tide, Germany's second-largest airline embarked on a massive restructuring plan in September 2016 that included renting 38 aircraft with crew to Lufthansa and slashing 1,200 jobs or one in seven of its workforce.
Amid the restructuring, it was hit by a series of flight cancellations and severe delays, leading to a flood of complaints.
Lufthansa said it was"already in negotiations with Air Berlin to take over parts of the Air Berlin Group and is exploring the possibility of hiring additional staff".
Germany's giant services sector union Verdi responded with dismay to Air Berlin's surprise announcement.
"This is a heavy blow for Air Berlin employees,"said Verdi board member Christine Behle.
"Our priority now is to secure jobs. Air Berlin must proceed with the utmost transparency and provide all necessary information."
The pilots'union Cockpit said the Air Berlin news came as"a shock".
It welcomed the government's help in minimising the disruption over the coming months, but it accused Etihad of making the wrong strategic and management decisions and turning its back on Air Berlin workers.
"Etihad is dropping Air Berlin like a hot potato,"it said.
Air Berlin said two members of its board of directors, who joined after being nominated by Etihad, had resigned.
