Air Berlin, Germany's second-largest passenger carrier, filed for insolvency on Tuesday.
The German government is reported to have stepped in to fund the company to maintain scheduled flights.
Air Berlin’s insolvency came after its main shareholder, Etihad, stated it would not give further financial support to the German carrier.
Berlin’s economy ministry, meanwhile, said in a statement it would offer a transitional loan of €150 million ($175 million) to protect customers' rights.
The carrier, which had accumulated debt since 2008, announced a record loss of over €780 million ($910 million) last year.