Air Berlin Calls Investors to Invest €450m for Restructuring
Air Berlin, German low-cost airline, has requested investors to invest €450m to finance a 'comprehensive restructuring' of the business. The airline does not want its own ownership structure to be affected, after facing loss last year.
Etihad Airways, main shareholder of the airline, has subscribed to a subordinated bond worth €300m, which will issue a new bond of at least €150m. Etihad will offer new bonds with maturity in 2019 and will make exchange offer to bondholders with notes due in 2014 and 2015.
Currently, the credit facility for Air Berlin is 2016 which will also be increased to 2021 by Etihad, which owns 29.2% of the German airline. In order to compensate earlier budget losses, the company has been cutting the number of jobs and unprofitable routes.
In 2013, the airline registered a loss of €231.9m. Moreover, the company's total equity fell from a positive €130.2m in 2012 to a negative €186.1m at the end of the year in 2013. The company considers increase in temperatures in central Europe resulting in unexpectedly weak summer season to be the reason for its loss.
At present, the airline has more liabilities than its assets and claims that its recapitalization will not pose any affect to its ownership structure. Earlier, it was believed that Etihad might increase its stake after Air Berlin. The company twice postponed publication of its 2013 results.
The European Commission is keeping a close watch on foreign holdings of the airlines to check whether foreign holdings in airlines comply with rules on foreign ownership and control. Being part of building up a global presence and driving traffic through Abu Dhabi, Etihad holds significant stake in the airline.
Ulf Hüttmeyer, the company's chief financial officer, said: "With our successful comprehensive recapitalization we can gain the necessary room for maneuver to fundamentally restructure the airline and head back to profitability".
Marco Ciomperlik, chief maintenance officer of Air Berlin, said the company posted its first profit in five years in 2012 by selling majority stake in its frequent flyer program to Etihad.
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