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Lufthansa and German Government to support restructuring of airberlin

Lufthansa and German Government to support restructuring of airberlin

Germany's Air Berlin filed for insolvency on Tuesday, spurring the country's government to step in to allow the airline to continue operating.

Ryanair has launched complaints with competition authorities in Germany and the European Union over Lufthansa's involvement in the administration of Air Berlin.

Air Berlin sank into insolvency this week after Gulf shareholder Etihad said it would no longer provide financial backing for the carrier. Etihad bought a 29% stake in 2012 as part of a plan to feed more passengers through its Abu Dhabi hub by building a network of minority investments, a strategy that it is now unraveling after itself suffering losses of United States dollars 1.87 billion in 2016.

On Monday, in a prepared statement Air Berlin announced that it was continuing to fly with help from loans by the government, but the filing puts at risk thousands of jobs in Germany.

Already the carrier had been trying to ease its costs and lighten its debt load of 1.2 billion euros after reporting a record loss of 782 million euros past year.

The low-priced airline reported losses of $3.2 billion over the past six years.

Aviation expert Heinrich Großbongardt said that Lufthansa stands to profit big-time from the demise of Air Berlin.

Lufthansa says it is "jointly with German government" supporting Air Berlin's restructuring effort. "It's a bad day in the Etihad office, that's for sure, but now Etihad is arguably free from Air Berlin, it can get back to business as it looks to turn around its losses". In its own statement, Lufthansa verified that it is in negotiations to take over portions of Air Berlin Group. Damian Brewer of RBS said: "For Lufthansa we see any moves as defensive - blocking other more competitive airlines from expanding".

Neither the German government nor Lufthansa have commented on Ryanair's assertion. "We remain open to helping find a commercially viable solution for all parties", it said. "This also ensures that all aircraft that are now operated by airberlin under a wet lease agreement for Eurowings and Austrian Airlines will continue operating as before".

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