Air Berlin is seeking damages from Etihad for “letting” it become insolvent. No folks, this is actually not some sick joke. This is true.
Air Berlin is demanding at least 10 million euros, blaming Etihad for “letting” it become insolvent. The carrier is just two days away from closing shop and has already abandoned its longhaul routes.
Frank Kebekus, a Dusseldorf-based bankruptcy lawyer serving as administrator stated:
We are in negotiations with Etihad and hope to reach a general settlement soon. We are hoping for a two-digit million euro sum.
But why? Why should Etihad be on the hook for Air Berlin, a poorly run airline that lost billions over the last five years?
Three Possible Reasons Why Air Berlin is Seeking Millions from Etihad
I’m putting myself in Air Berlin’s shoes, racking my brain to try to find justification for why it would sue or at least make demands. Three possible reasons come to mind.
- Etihad, which owns a 29% stake in Air Berlin, made assurances of another financial lifeline only to renege upon them. Such assurances played directly into Air Berlin’s long-term business plan. Thus, but for Etihad’s untimely change of heart, the carrier would have survived.
- Part of Etihad’s agreement with Air Berlin is that it will assume a portion of the company’s debts during insolvency. Air Berlin borrowed EU150 million from the German government to keep the carrier alive over the last two months. Such a lifeline was conditioned upon repayment with a 10% interest rate. That still has not been paid back.
- Air Berlin allowed Etihad to acquire nearly 1/3 of its airline on the express assurances of Etihad that it would turn the carrier around. By failing in its fundamental mission, Etihad is liable for helping Air Berlin service its creditors.
These are purely speculation and weak speculation at that.
Am I missing anything?
View from the Wing calls it chutzpah, but I call it disgusting. It is proper that Air Berlin is going out of business and while Etihad certainly made a poor investment, I see no reason why it should pay any damages to Air Berlin for lending a helping hand to a carrier that would have only failed faster without such help.