TUI approves plan to create new airline with Etihad

A new European leisure airline has been cleared for take-off by Tui, the world’s largest tour operator, after its board approved plans to merge its budget German carrier with part of Etihad Airways-backed rival Air Berlin. Abu Dhabi’s Etihad Airways, which is Air Berlin’s biggest shareholder, is in discussions with Tui over a joint venture to create an airline focused on tourism capable of carrying 15m passengers a year on a fleet of about 60 aircraft. For Etihad, the combination is seen by analysts as a crucial step in salvaging its investment in Air Berlin, in which it acquired a 29.2% stake in 2011. It has been forced several times to inject cash into the German airline to keep it going through significant financial problems. However, Tui, whose supervisory board gave approval to the initiative on Tuesday, has faced staff resistance to the merger of the operations. The plans were thrown into disarray days after being announced last month after industrial action by Tui flight crews forced the company to postpone a decision on the proposals. Under the plans, Tuifly will be placed into a joint venture with Air Berlin’s stake in Austrian carrier Niki and its tourist business, which Etihad is in talks to first acquire. Under the complex deal, Etihad will own 25% of the new business, which will be based in Vienna, while Tui will have a 24.8% holding. The remaining 50.2% will be in the hands of Niki Privatstiftung, a private foundation. TUI said contractual negotiations between the stakeholders were expected to conclude in the next few weeks.<br/>