Talks to set up a new airline have ended.
"[The] aviation sector is characterised by overcapacity in Germany", said Sebastian Ebel, a member of TUI's executive board in charge of Germany, Austria, Switzerland and Poland.
Just weeks ago Tui said that negotiations with the Gulf carrier to create an airline serving the German, Austrian and Swiss markets were ongoing but now Etihad has walked away.
The proposed joint venture with TUI was meant to create "a strong European leisure airline", TUI said.
Shares in TUI AG were down 1 pct at 1,154 pence by 1430 GMT, while shares in Air Berlin shed 7.6 percent to 0.8350 euros. The FTSE 100 company, however, noted that it remained open for partnerships and joint ventures.
China concerned over 'killing' of kidnapped nationals in Pakistan
A young couple teaching Chinese in a town in Balochistan were kidnapped last month, while a third Chinese national escaped. A Baluchistan government spokesman said officials were in the process of confirming "whether the report is true".
TUI then confirmed the collapse of joint venture talks in a statement in which it added that it generally "remains open to a partnership or the creation of joint ventures".
The proposal was for Etihad to acquire Airberlin's holiday operations, mainly in southern Europe and north Africa, together with Airberlin's participation in Niki, to enter into a joint venture with TUI's German airline subsidiary TUI fly. "We will push the repositioning of TUI fly further ahead in order to develop long-term prospects for the airline and its employees".
The news raises fresh questions about the fate of loss-making Air Berlin, Germany's second largest airline, which depends on cash infusions from Etihad for survival.
According to Etihad, the leisure operations of airberlin group will now continue to operate as a separate business unit under the FlyNiki brand. Air Berlin said Etihad has granted another loan facility of 350 million euros and a letter of support for at least 18 months.
The original plan had called for TUI AG to hold 24.8% of shares in the JV, with Etihad holding a 25% stake.
Comments