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Air Berlin in bankruptcy; future uncertain


Air Berlin, Germany's second-largest carrier, has filed for insolvency, following a decision by its major investor, Etihad Airways, to refuse any further funding for the company, which has been losing money for a decade.

The airline will continue flying for now, using a €150 million bridge loan from the German government while Lufthansa and at least one other airline work on salvaging and  acquiring parts of the failed operation.

The collapse of Air Berlin follows other moves by Etihad to back out of its touted strategy of a few years ago of taking equity stakes in European airlines to build a network that would extend its own Middle East-based routes. In recent months, Etihad called a halt to its investment in Alitalia, forcing it into liquidation, and  has sold its shares of Swiss discounter Darwin to Slovenia's Adria Airways.

Air Berlin was originally seen as a discount challenger to Lufthansa, although it took on more  and more  aspects of a mainline carrier, including significant trans-Atlantic routes. However, for at least ten years it has been losing money and the drain has accelerated this year. As well, its passenger numbers have fallen off  sharply this  year, in part due to a wave of  delays and  cancellations.

Air Berlin is a oneworld alliance member, aligned with American and British Air; Lufthansa, the likely future operator of most surviving assets of  the airline, is a mainstay of Star Alliance. If the  Air Berlin name survives, it will likely not be a  oneworld carrier.

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