Airberlin files for insolvency. Lufthansa to cherry pick from its operation; easyJet also looking

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Air Berlin PLC, the parent of airberlin and NIKI, has filed for provisional insolvency proceedings in a court in Berlin-Charlottenburg (NIKI is not included). 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.

The Lufthansa Group already wet leases Airbus narrowbodies from airberlin and the government is to provide a EUR150 million loan to airberlin, allowing it to continue to operate during its administration. Noises from the government suggest that closer ties between Germany's two biggest airline groups may not attract close regulatory scrutiny. Etihad called the filing "extremely disappointing" given its "extensive support" since it invested in 29% of Air Berlin PLC's equity in late 2011. It is also extremely costly for Etihad, hard on the heels of Alitalia's Jun-2017 entry into administration.

Given airberlin's long history of losses, it is no surprise that it is filing provisional insolvency proceedings, particularly as Etihad has run out of patience and cash to support it. Lufthansa has played a canny waiting game over a number of years and is now well placed to cherry pick those parts of airberlin's operation that suit it best without buying the whole loss-making enterprise. EasyJet also has a reported interest in airberlin assets. Lufthansa's priority will be to keep Ryanair out. The German Federal Cartel Office and the EU Commission will be watching with great interest.

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