FRANKFURT: Abu Dhabi-based Etihad Airways said on Thursday it had pulled out of talks with TUI Group , Europe’s largest tour operator, aimed at creating a new joint venture holiday airline.
Under plans outlined last year TUI’s own airline TUIfly was to be merged with Air Berlin’s leisure airline Niki once Niki was bought out of Air Berlin by Etihad. The Gulf airline has a near 30 percent stake in Etihad.
Etihad said on Thursday that it was not able to reach agreement on the final nature of the joint venture despite “many months of negotiations,” while TUI said Niki was “no longer available” for a deal.
“A strong European leisure airline continues to make great strategic sense. After all, the aviation sector is characterised by overcapacity in Germany,” said Sebastian Ebel, TUI’s executive board member, said.
“However, Niki is no longer available for a joint venture. We will push the repositioning of TUIfly further ahead in order to develop long-term prospects for the airline and its employees,” Ebel said in a statement.
TUI said it remained open for partnerships and joint ventures.
As part of the deal Etihad was planning to buy Niki from Air Berlin before combining the business with TUIfly.
Air Berlin had already received €300 million ($337 million) from Etihad for Niki, according to Air Berlin’s annual report.
But Etihad said in the statement the leisure operations of Air Berlin group would now continue to operate as a separate business unit, under the Niki brand.
“Further details of this structure will be announced in due course by Air Berlin,” Etihad said.
Air Berlin said earlier that it was open to working with Lufthansa.
The airline booked losses amounting to €1.2 billion for the last two years, and depends on cash infusions from key shareholder Etihad for survival.
“We need to find a partner in 2017, and Lufthansa is a possible one,” said Air Berlin Chief Executive Thomas Winkelmann.
“I will look at everything that makes sense for Air Berlin and secures jobs in the long term,” he told Die Zeit weekly in an interview.
Executives from Germany’s second-largest airline presented a massive restructuring plan in late September that included renting 38 aircraft with crew to Lufthansa and slashing 1,200 jobs — or one in seven of its workforce.
Amid its restructuring, it has also been hit by a string of flight cancelations and severe delays, including over the recent Whitsun long weekend.
Winkelmann apologized to his clients for the problems, saying: “I am sorry for the delays. I myself am furious when there is a delay of more than ten minutes.”
But beyond the bad publicity caused by the delays, the airline would also have to pay a price.
According to Germany’s biggest daily Bild, compensation payments over the Whitsun weekend alone are expected to reach more than €500,000.
TUI, Etihad abandon plans to form new leisure airline
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