Abu Dhabi-based Etihad Airways is to spend 73 million euros to increase its stake in Air Berlin to almost 30 percent and loan it nearly 200 million euros.
The two airlines will also cooperate more on flights.
The deal represents a life-line for debt laden Air Berlin which has been trying to shrink its way back to profit. It has cut money losing routes and delayed orders for new planes.
“Air Berlin has a strong position in Germany, but we are also interested in its position in Austria and Switzerland,” Etihad Chief Executive James Hogan said after the deal was announced.
Hogan said Air Berlin’s existing major shareholders, which include Turkish group ESAS Holding, owned by the Sabanci family, and TUI Travel, have endorsed the deal.
The agreement also gives Etihad access to Germany’s capital city, ahead of Dubai-based rival Emirates, which has been lobbying to be allowed to fly to Berlin for years. So far, Etihad has only been able to fly in and out of Frankfurt, Munich and Dusseldorf in Germany.