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Mergers & Acquisitions

Air Berlin hits new turbulence amid delisting rumors, talk of Alitalia merger

According to media reports, struggling airline Air Berlin is planned to be delisted and merged with Alitalia. The move was part of an effort by Etihad Airways to raise its stake in Germany’s second biggest carrier.

Abu Dhabi-based airline Etihad Airways was planning to raise its stake in Air Berlin from currently 30 percent to 49.9 percent, German business magazine WirtschaftWoche reported on Saturday (22.03.2014).

Part of the plan was also a buy-out of small shareholders, who currently own 38.5 percent, and delisting Germany's second largest airline from the London Stock Exchange, the magazine said, citing company sources.

Larger shareholders, including former managers and travel firm TUI would retain a majority in the airline, WirtschaftWoche added.

Air Berlin is currently in advanced discussions on options, which, if implemented, would have a substantial effect on the company, Air Berlin spokesman Mathias Radowski was quoted as saying.

Airlines struggle in tight markets

Air Berlin has run into financial problems on the back of rapid expansion over the past decade. In November, Germany's second largest carrier after Lufthansa said it would not meet its target of breaking even at the operating profit level in 2013. Moreover, it said it needed additional sources of income to keep its loss limited. On Wednesday, Air Berlin postponed the release of its annual results until next week.

Rumors of merger with Alitalia

According to WirtschaftWoche, Etihad Airways Chief Executive James Hogan was seeking the backing of the German government to go ahead with the deal.

There was also speculation of a merger between Air Berlin and ailing Italian flagship carrier Alitalia, the magazine reported. Etihad is said to be in the phase of due diligence to take an equity stake of 40 percent in the airline, which is saddled with 800 million euros ($1.1 billion) of debt.

Etihad was exploring ways to combine Air Berlin and Alitalia to generate synergies and to preserve Air Berlin's international traffic rights.

uhe/slk (Reuters, AP, dpa)

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