Air Berlin (1991) (Berlin Tegel) is set to undergo massive restructuring following the recent announcement of a EUR231.9million (USD320million) operating loss for its 2013 Financial Year blamed on a sluggish summer season caused by high temperatures in Central Europe and compounded by weak European economies and increased competition.

“Even though the Turbine efficiency program has delivered according to plan and will take full effect in 2014, we have to increase the pressure during implementation, drive further measures as well as thoroughly evaluate our possible courses of action including airberlin´s long-term business model. This restructuring will focus on efficiency, while our core proposition to offer best service to our guests and partners remains unchanged,” said Wolfgang Prock-Schauer, CEO of Air Berlin.

Among the measures the carrier has outlined to turn around its waning fortunes is a dramatic recapitalization to the tune of EUR450million to be used for working capital, refinancing and general corporate purposes. The carrier says its largest individual shareholder, Etihad Airways (EY, Abu Dhabi International), will play a pivotal role.

"This recapitalisation is based on two pillars: first, Etihad Airways has subscribed to a convertible bond in the amount of 300 million euros. As this is a perpetual subordinated bond, it will be posted as equity under IFRS accounting principles," it said.

Further to that, the term of a shareholder loan granted by the Emirati carrier to the tune of USD255million, of which USD135 million has been drawn, has been extended from December 31, 2016 to December 31, 2021.

In the second phase, Air Berlin will issue another bond valued at EUR150million, the proceeds of which will be used for general corporate financing purposes. The airline says holders of the 2014 and 2015 bonds will be offered to exchange their existing bonds at preferential terms as set out in the exchange offer into the new bonds with a maturity in 2019.

Air Berlin said the cash call would not affect its current shareholding structure.