Talks end on new European leisure carrier.

Etihad Aviation Group’s hopes for financially struggling investment Air Berlin have taken a sharp turn after the German airline group cancelled plans to set up a new European leisure airline with travel company TUI AG. Etihad issued a statement Thursday confirming the collapse of negotiations to form a joint venture that would have seen Air Berlin offshoot Niki join forces with TUIfly to create the new airline. Etihad holds just under 30 per cent of Air Berlin and the deal was part of efforts to restructure the loss-making airline group. But European media reported Etihad was unable to make the joint venture work economically. A source close to the talks told London’s The Telegraph that the “the sums did not add up” because the costs of running the business would struggle to be competitive against low-cost rivals. Etihad said it took the decision after months of good-faith negotiations because the parties were unable to reach agreement on the final nature of the joint venture. “The leisure operations of Air Berlin group will 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,’’ the Abu Dhabi-based carrier said. “Niki’s operating schedule remains unchanged with all bookings being honoured.  Customers should contact NIKI directly for any further information.’’ A  member of TUI AG’s executive board in charge of the central region covering Germany, Austria, Switzerland and  Poland,  Sebastian Ebel,  said a strong European leisure airline continued to make strategic sense. “However, Niki is no longer available for a joint venture,’’ he said in a statement. “We will push the repositioning of TUI fly further ahead in order to develop long-term prospects for the airline and its employees.” The German travel company said it remained open to a joint venture or partnership with another company that would serve “the strategic goal’’ of reshaping and stabilising the German market. The failure to reach an agreement with TUI comes as another Etihad investment, Alitalia, is in extraordinary administration after workers rejected a restructuring deal. The administrators sought expressions of interest from companies willing to take on the financially-troubled carrier and said they had received 32 submissions by a June 5 deadline. According to Italian media, however, none of the expressions were for the entire airline. Ryanair confirmed that it had submitted a proposal to feed Alitalia’s long-haul traffic using its aircraft but said it was not interested in buying the troubled airline. Some carriers have expressed an interest in Alitalia’s aircraft should they become available.