Airberlin, the German airline in which Etihad Airways owns just under 30 per cent, plans to refinance an existing bond to reduce interest costs ahead of a transaction to improve earnings. Airberlin plans to increase by least €50 million ( $68 million ) the volume of its €150 million bond issued April 19, 2011 , which pays 8.25 per cent interest and matures 2018, it said in a statement on Thursday. The yield stood at 6.2 per cent on Thursday after spiraling to 15.8 per cent at the end of 2011 amid concerns about the carrier's ability to repay debt. "Airberlin is exploiting the currently favourable conditions on the capital market and the positive development of the bond," said Airberlin spokesman Mathias Radowski . Financing concerns at airberlin, with negative equity of €6.1 million as of September 30 , have eased since Etihad increased its stake in the carrier in December 2011 , and said it would loan the German airline $255 million . CFO Elf Huettmeyer said on November 14 that airberlin is working on a transaction that would yield a one-time positive contribution to cash flow and operating profit. "We expect another hidden equity injection by Etihad, which could potentially buy airberlin's maintenance unit, again for an excessive price as happened with airberlin's loyalty programme," said Alexandre Daniel , a fixed-income analyst at Berenberg in Hamburg . "That would be Etihad bailing airberlin out for the third time." The Gulf's third-largest airline had bought a stake in the carrier's customer loyalty program for €184.4 million a year ago, and CEO James Hogan on January 13 said his investment in Air Berlin is long-term. The shares have gained 32 per cent his year on speculation Etihad may provide additional funds. The gain is more than twice the 14 per cent advance of the Bloomberg Industries EU Airlines Competitive Index.
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