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Wed 2 Apr 2014 10:28 AM

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Etihad-backed Air Berlin shares rebound as finance talks continue

German airline has refuted claims of difficulties, saying it had enough money to run its business

Etihad-backed Air Berlin shares rebound as finance talks continue

Shares in Etihad-backed German carrier Air Berlin rebounded yesterday to finish €1.88 ($2.59) at the close of trade after a volatile week on the back of uncertainty over its financial position.

The company is at the centre of speculation over its future structure with at least one German analyst quoted by UAE media on Tuesday saying that there were uncertainties over Etihad Airways “making an acquisition, a merger or anything else with Air Berlin”.

On Saturday Air Berlin was forced to deny claims by an investor rights group it was trying to hide its financial difficulties by twice delaying publication of its annual results, saying it had enough money to run its business.

The airline, which is 29.21 percent owned by Abu Dhabi-based Etihad Airways, on Wednesday postponed publication of its results for the second time in a week, saying it was in talks for a recapitalisation to strengthen its finances.

Analysts say one option could be Etihad increasing its stake in Air Berlin, with another option privatisation of the German carrier.

“The company has sufficient liquidity and also has additional flexibility through an undrawn shareholder loan,” Air Berlin said in an emailed statement to Reuters on Saturday.

Daily newspaper Berliner Zeitung quoted Michael Kunert, spokesman for investor rights group SdK, as saying he believed Air Berlin had breached financial disclosure rules.

"Mr. Kunert's claims are wrong, and we believe they are damaging to our business," Air Berlin said, adding it would not rule out legal action against SdK.

The airline’s share price has taken a hit over the past week – falling from €2.13 on March 24 to as low as €1.75 on March 31 on the London stock exchange. As of close of trade on Tuesday shares had rebounded 7.54 percent on the previous day to close €1.88.

As well as Etihad, other major shareholders include ESAS Holding AS, which has 12.02 percent of voting rights, and Hans-Joachim Knieps, which has a 5.48 percent stake.

It’s last public announcement on March 26 Air Berlin said: “Air Berlin PLC announces that the board of directors continues to work on measures for a recapitalisation which would strengthen the equity and liquidity position of the Air Berlin Group. The company is continuing its discussions on those measures with certain shareholders and finance providers.

It said a new date to announce its annual report will be announced in April.

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