Air Berlin Insolvency Administrator Seeks Multi Million Euro Damages From Etihad For Causing Bankruptcy

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Air Berlin’s insolvency administration came forward this week with a bizarre claim that they consider Etihad being responsible for the German carriers sudden insolvency and now seek for a multi million Euro settlement.

Air Berlin will shut their doors this coming week and in search for extra money they are now going after Etihad Airways actually blaming them for the companies downfall.

When this entire mess started to unravel in August it came as a result of Etihad suddenly pulling the plug as majority shareholder of Air Berlin and decided that no more money will be wasted on that operation after the carrier has burned through cash for years, never being able to turn a profit.

Etihad decided to no longer hold on to their letter of guarantee as issued earlier which would have meant an ongoing financial support even though Air Berlin would have likely just used that money up in a few months as well

Now Reuters (access here) reported that the insolvency administrator in Germany seeks damages from Etihad for causing the carriers demise.

German airline Air Berlin is demanding damages from its part-owner Etihad Airways for letting it become insolvent and it hopes for payment of at least 10 million euros (£8.94 million), Air Berlin’s administrator told a German newspaper.

“We are in negotiations with Etihad and hope to reach a general settlement soon. We are hoping for a two-digit million euro sum,” daily Rheinische Post on Saturday quoted administrator Frank Kebekus as saying.

Air Berlin, Germany’s second-biggest airline after Lufthansa, filed for bankruptcy in August after Etihad, the owner of almost 30 percent of Air Berlin, withdrew funding following years of losses. …

Air Berlin is due to cease operating flights by Oct. 28 at the latest, and Kebekus said that around 4,000 workers could then lose their jobs unless a transfer company was set up that would temporarily employ them until they found work elsewhere.

I fail to see the merit of Air Berlin’s demands in this case apart from not fulfilling their obligation outlined in the letter of guarantee that is. The airline has been a notorious loss maker with no end in sight. Who can blame Etihad for pulling the plug? The same happened with Alitalia where Etihad gave up as well after employees and unions voted against a restructuring plan. Alitalia then went bankrupt and is currently kept afloat through a variety of government loans.

Based on this Bloomberg article Air Berlin ran through 2.7 Billion Euro in about six years time. That’s a staggering sum and doesn’t leave much hope for an investor that things would change.

Conclusion

The Air Berlin insolvency is really exemplary of how the airline has been run for years: Chaotic! Etihad and Topbonus Loyalty (formerly Air Berlin topbonus) have just struck a deal that allows members to redeem leftover miles for flights again, although in Economy Class. Now Air Berlin goes after them for 10 Million. I wonder if Etihad will actually pay as part of a settlement or if this will end up in court.

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