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UPDATE 1-Air Berlin asks Berlin, NRW to consider state loan guarantees
June 8, 2017 / 3:39 PM / 5 months ago

UPDATE 1-Air Berlin asks Berlin, NRW to consider state loan guarantees

* Air Berlin in push to save 8,000 German jobs

* Key shareholder Etihad abandons talks with TUI on leisure airline

* Prospective partner Lufthansa said Air Berlin’s debt a hurdle (Adds background on Air Berlin’s problems, Etihad, Lufthansa)

FRANKFURT, June 8 (Reuters) - Ailing German airline Air Berlin said on Thursday it has asked the German states of North-Rhine Westphalia (NRW) and Berlin to consider possible loan guarantees amid signs of waning support from Etihad Airways, its biggest shareholder.

Abu Dhabi-owned Etihad, which has thrown Air Berlin several life lines over the years, earlier on Thursday said it had pulled out of a prospective deal to combine Air Berlin’s holiday flight business Niki with tour operator TUI Group’s own carrier TUIfly.

Bigger German rival Lufthansa, which last year agreed to lease 38 crewed planes from Air Berlin, has held talks recently with the Abu Dhabi government about taking part in salvaging the remaining Air Berlin business but said its debt was a sticking point.

Air Berlin, whose losses increased to a record 782 million euros ($877 million) in 2016, is now scrambling to protect its roughly 8,000 jobs in Germany, mainly based in the two regional states of Berlin and NRW.

Officials of the two states declined to comment.

Etihad, which holds 29 percent of Air Berlin, last month appointed a new boss as it rethinks its strategy of expanding its network by spending billions of dollars on buying minority stakes in other airlines, including Air Berlin and heavily indebted Italian carrier Alitalia..

German newspaper Die Welt was first to report the Air Berlin loan guarantee request, saying the aim was to see whether the regional states would be ready to step in, citing people close to the negotiation.

For now, Etihad continues to provide funding. Air Berlin said Etihad has granted another loan facility of 350 million euros and a letter of support for at least 18 months.

Air Berlin Chief Executive Thomas Winkelmann told a German newspaper on Wednesday he would have to find a partner this year to help secure jobs and the company’s long-term future and a pact with Lufthansa was among the options. ($1 = 0.8915 euros) (Reporting by Peter Maushagen; Writing by Edward Taylor and Ludwig Burger; Editing by Greg Mahlich)

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