Etihad pushes ahead with new European leisure airline

by Steve Creedy -editor
December 06, 2016

Gulf aviation group Etihad is pressing ahead with plans with travel group TUI AG to create a new European leisure airline operating a fleet of about 60 aircraft and offering 15 million seats annually.

The move, which is still subject to approval by aviation regulatory and anti-trust authorities,  is also part of a restructure by financially struggling Etihad joint venture partner airberlin to improve its bottom line.

The new Vienna-based leisure airline is expected to begin operation in April to take advantage of the norther summer season and will service key holiday markets such as Balearics, Canaries, mainland Spain and Greece.

It aims to take advantage of Etihad’s aviation experience and TUI’s tourism expertise to keep overheads low. 

Ports in Austria, Germany and Switzerland will include Hanover, Berlin, Düsseldorf, Cologne, Frankfurt, Stuttgart, Munich, Nuremberg, Baden-Baden, Hamburg, Basel and Vienna.

Under the deal, Etihad Aviation Group’s board agreed to  pay 300 million euros for a 49.8 per cent stake indirectly held by airberlin in subsidiary airline NIKI.

Etihad's  holding company will contribute its share in NIKI to the new leisure airline while TUI will convert its subsidiary TUIfly to the joint venture. This includes 14 aircraft operated by TUIfly for airberlin under a wet lease agreement (where both the aircraft and the crew are leased).

The deal will see TUI holding 24.8 per cent of the shares in the new company, Etihad with 25 per cent and the remaining 50.2 per cent by the existing NIKI private foundation.

It will also see airberlin, which has a market value of 68.9 euros but has made losses of 1.27 billion euros over three years, adjust its European city network to concentrate on year-round business travel in the German, Nordic and Eastern European markets.

The German carrier will from next year's northern summer transfer slots for “certain touristic destinations’’ in Southern Europe, North Africa and Turkey to NIKI. This exclude slots in Italy but include the Canary Islands and Madeira.

Long-haul destinations in the US, the Caribbean and Etihad’s home base of Abu Dhabi will remain with airberlin.

Airberlin chief executive Stefan Pichler said airberlin would invest further in its business travel offering, network connectivity and the expansion of profitable long-haul routes, particularly to the US.

“We are delivering a decisive step towards our new strategy. This transaction simplifies our business, reduces our exposure to seasonal destinations and improves our financial position,’’ he said. “Step by step, we are transforming airberlin into a network carrier focused on domestic and European traffic to feed our two long-haul hubs in Berlin and Dusseldorf.”

Airberlin said its current schedule remains valid and available for booking and it would inform customers should scheduled flights be operated by NIKI.

The German carrier, a member of the oneworld alliance and 29.21 per cent owned Etihad,  flew more than 30.2 million passengers in 2015 and operates hubs at Berlin-Tegel and Dusseldorf.