DUBAI, April 28 (Reuters) - Abu Dhabi’s Etihad Airways on Monday called for an “accelerated and fundamental restructuring” of Air Berlin, after the German airline’s largest shareholder injected cash into the loss-making carrier.
Air Berlin said late on Sunday night Etihad has subscribed to a convertible bond worth 300 million euros ($415 million) and the Gulf airline has also agreed to extend a $255 million loan by another five years.
“The airline is clearly in a very challenging position,” Etihad’s Chief Executive James Hogan said in a statement following Air Berlin’s announcement.
“However, we are confident the business is moving in the right direction, and can be turned around but it needs an accelerated and fundamental restructuring.”
Air Berlin on Sunday named Marco Ciomperlik, currently its chief maintenance officer, to its management board to oversee a restructuring programme for the airline.
The German airline had said last month it was in talks over certain options that prompted speculation that Etihad could gain more control over the carrier.
But Hogan said Etihad would remain a “strategic minority investor” in Air Berlin. The German airline also said its recapitalisation would not change the ownership structure.
“Etihad Airways believes Air Berlin can become a sustainably profitable business, securing the jobs of its 8,900 employees and the many thousands more workers it indirectly supports,” he said, adding that Etihad is looking at a long-term benefits of the partnership and is committed to the strategy.
Etihad, which is backed by Abu Dhabi’s oil wealth, is using a combination of equity alliances and organic growth to expand its global reach and compete with fast-growing regional rivals Emirates and Qatar Airways.
It took a 29.2 percent stake in the struggling German airline in 2011 and also extended a $255 million loan to the carrier. The Gulf airline later took a majority stake in Air Berlin’s frequent flyer programme helping the carrier post its first profit in five year in 2012.
Air Berlin still reported a 2013 loss before interest and tax (EBIT) of 231.9 million euros, compared with a year-earlier profit of 70.2 million.
The European Union is looking into whether Etihad exercises more control than allowed under the region’s rules for airlines with a European operating licence.
Etihad also has also minority stakes in a number of other airlines, including Virgin Australia, Aer Lingus and India’s Jet Airways. (Reporting by Praveen Menon. Editing by Jane Merriman)