Frankfurt, Berlin
TUI is considering resurrecting efforts to form a joint venture with Air Berlin and Etihad Aviation Group by taking a bigger role in the endeavour than originally planned, according to people familiar with the situation.
TUI is studying whether to take a majority stake or even full ownership of the proposed leisure airline — which was intended to combine assets from Air Berlin’s Niki and TUI’s TUIfly — said the people, who asked not to be identified as the talks are private. However, TUI’s reluctance to add German capacity stands in the way of a deal, said one of the people.
The original project, which collapsed a month ago when Abu Dhabi-based Etihad pulled out, was aimed at letting German tour operator TUI revive its unprofitable TUIfly airline while allowing loss-burdened Air Berlin to offload its Niki leisure brand.
TUI and Etihad, Air Berlin’s biggest investor, would have each held about one-quarter of the venture, with just over 50 per cent owned by the Niki Privatstiftung foundation in Austria. Combining TUIfly and Niki would have created a 60-plane fleet serving mainly Mediterranean and North African vacation destinations from Germany.
TUI is focusing on further improving efficiency at the airlines across its group, after reducing aircraft procurement costs and maintenance and ground operating expenses, TUI spokesman Kuzey Esener said, declining to comment further. The company said last month that it remains open to a partnership or joint venture that may help improve the competitive position of its German arm.
Representatives for Air Berlin and Etihad declined to comment.
Debt pile
While TUI could buy Niki and is considering such a deal, that option isn’t likely because carving Niki out of Air Berlin would be costly and time-consuming, one of the people said. Plus, TUI wants to reduce its German airline capacity amid a glut of seats.
That said, it’s in TUI’s interest to ensure Air Berlin’s survival because if that carrier fails, TUIfly would have to take back the 14 aircraft and crews it is leasing to its partner, once again setting back its streamlining efforts.
All parties involved are under pressure. Air Berlin has posted seven annual losses in the past eight years, and the TUIfly-Niki venture was part of a strategy to narrow its focus to its scheduled flight network while jettisoning point-to-point and leisure operations. Etihad is trying to untangle itself from a flailing German venture at a time when its mainline faces a tough market and its investment in Alitalia unravels.
