Air Berlin filed for insolvency on Tuesday but will remain operating after the German government and Lufthansa step in to prevent a collapse.
Air Berlin has filed for administration after its largest shareholder Etihad declared it would not be providing further financial support.
Germany’s second-largest airline has struggled to compete with low-cost rivals and has only managed to stay afloat due to repeated cash injections from Etihad, who own 29% of the airline.
A spokesperson for Etihad said: “In April this year, Etihad provided €250m of additional funding to Air Berlin as well as supporting the airline to explore strategic options for the business. However, airberlin’s business has deteriorated at an unprecedented pace, preventing it from overcoming its significant challenges and from implementing alternative strategic solutions.”
The German government has granted a bridging loan of €150m to keep the airline operating for the next three months whilst negotiations for a Lufthansa takeover continue.
Air Berlin’s low-cost subsidiary airline Niki will also continue to operate as usual for the time being.
Thomas Winkelmann, Air Berlin’s chief executive, said: “We are working tirelessly to achieve the best possible outcome for the company, our customers and employees, given the situation.”