Air Berlin’s administrator sues Etihad for up to €2 billion

An AirBerlin Boeing 737 pictured in Dusseldorf. (Reuters)

• Carrier has until end of January to respond to claims
• Etihad owned a 29 percent stake in Air Berlin

LONDON: The administrator of German airline Air Berlin is suing Abu Dhabi-based Etihad for up to €2 billion in damages, a Berlin court heard on Friday.
The administrator alleges that the Abu Dhabi airline did not meet its financial obligations to Air Berlin, in which it was the majority shareholder.
“The claims are for payment of $500 million and the establishment that the defendant is obliged to pay further damages. The Chamber has provisionally set the amount in dispute at up to €2 billion,” the court said in a statement, Reuters reported.
"We confirm that we have received a claim filed at the Berlin Regional Court by the insolvency administrator of Air Berlin," Etihad said in a statement to Arab News. "We believe that the claim is without merit and will defend ourselves vigorously against it."
The carrier has until the end of January to respond to the claims, according to the court.
Etihad owned a 29 percent stake in Air Berlin as part of its so-called “equity alliance” strategy.
Etihad told Air Berlin in April 2017 that it would provide funding to the German budget carrier for the next 18 months.
However the Abu Dhabi-based airline later said it would no longer provide funding as Air Berlin’s business had deteriorated at an unprecedented pace.
The administrator claims this sealed the fate of the German airline as its fundling lifeline was cut.
Unlike regional rivals Emirates and Qatar Airways, Etihad grew its business through a strategy of taking stakes in often struggling regional carriers, some of which were also heavily unionized. The carrier described such deals as “equity alliances” and they came to define the tenure of former chief executive James Hogan.
However the strategy ran into serious problems after it was forced to absorb massive losses from its investment in Air Berlin, Alitalia and other carriers.
But the airline is now reviewing that strategy after being forced to absorb huge losses from its investments in carriers such as Alitalia and Airberlin.
Like its regional rivals, the Abu Dhabi carrier has cut jobs over the last two years.