Financial lift
December 19, 2011
German discount carrier Air Berlin hopes to fly out of financial turbulence with the help of Etihad Airways.
The Abu Dhabi state-controlled airline will pay 72.9 million euros ($94.9 million) to increase its holding in Air Berlin to 29.2 percent from 2.99 percent now. It will keep the shares for at least two years and not increase its stake during that time.
Last month, the German airline reported a 78 percent drop in its third-quarter net income to 30.2 million euros, as fuels costs and Germany's aviation tax narrowed margins.
Air Berlin has ruled out returning to operating profit this year and has said it is difficult to predict whether it would break even in 2012, given the worsening global outlook.
To trim 200 million euros in costs, the company is reducing capacity by more than one million seats and has postponed new plane orders.
Air Berlin said its deal with Etihad includes a code-sharing agreement and debt financing of $255 million until December 2016.
The airline also expects the commercial arrangement to bring synergies amounting to between 35 million and 40 million euros.
Author: John Blau (Reuters, AP)
Editor: Stuart Tiffen