KBRA Comments on Air Berlin Insolvency Filing

NEW YORK--(BUSINESS WIRE)-- On August 15, 2017, Air Berlin, Germany’s second-largest airline, filed to commence insolvency proceedings under self-administration at the local District Court (Amtsgericht) of Berlin-Charlottenburg. The filing comes after one of Air Berlin’s key shareholders, Etihad Airways, indicated that it would no longer provide Air Berlin with financial support. Kroll Bond Rating Agency (KBRA) understands that the insolvency filing is the closest equivalent under German law to filing for U.S. chapter 11 bankruptcy protection. It is unclear whether the airline will be restructured or whether its assets will be sold to several interested third parties.

Etihad Airways originally took a minority stake in several airlines, including Air Berlin and Alitalia, to enhance its passenger network and drive growth; however, Air Berlin is the second major airline in less than 5 months from which Etihad has withdrawn financial support. Prior to the insolvency filing, Etihad had repeatedly provided liquidity to Air Berlin to allow it to continue its operations. Similar to Alitalia, Air Berlin struggled with high costs and increased competition on routes operated by U.K.-based carriers. Air Berlin tried, unsuccessfully, to cut unprofitable operations and grow its trans-Atlantic routes to North America. Air Berlin’s lack of profitability contributed to Etihad’s reported $1.87 billion net loss for FYE March 2017 and the ultimate withdrawal of Etihad’s financial support from the airline. Air Berlin received a €150 million loan from the German government to continue operating flights in the short term.

Over the past year, KBRA has closely monitored the developments relating to Air Berlin through discussions with aircraft lessors/servicers and industry participants. Several KBRA-rated aircraft ABS transactions have exposure to Air Berlin. For complete details on the analysis, please see KBRA’s comment, KBRA Comments on Air Berlin Insolvency Filing, which was published today at www.kbra.com.

Related Publications: (available at www.kbra.com)

• Aviation ABS Rating Methodology
• Apollo Aviation Securitization Equity Trust 2014-1 (AASET 2014-1)
• Apollo Aviation Securitization Equity Trust 2016-2 (AASET 2016-2)
• Castlelake Aircraft Securitization Trust 2015-1
• Castlelake Aircraft Securitization Trust 2016-1
• DCAL Aviation Finance Limited
• Emerald Aviation Finance Limited, Series 2013-1
• Falcon Aerospace Limited
• Harbour Aircraft Investments Limited, Series 2016
• Labrador Aviation Finance Limited
• S-JETS 2017-1 Limited

CONNECT WITH KBRA

TwitterLinkedInDownload the iOS AppYouTube

About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

View source version on businesswire.com: http://www.businesswire.com/news/home/20170919006366/en/

Analytical:
Kroll Bond Rating Agency
Anthony Nocera, 646-731-2350
Senior Managing Director
[email protected]
or
Caitlin Colvin, 646-731-2465
Senior Director
[email protected]
or
Patrick McShane, 646-731-2376
Senior Director
[email protected]
or
Alan Greenblatt, 646-731-2496
Director
[email protected]

Source: Kroll Bond Rating Agency

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Silver Bow Mining gets court approval for Montana complex acquisition
• Green Circle inks China manufacturing deal for BocaPCM-TES panels
• Elmet Group to acquire ams OSRAM tungsten plant in Germany