NIKI no longer to merge with TUIfly in a setback for airberlin's restructuring

On 8-Jun-2017 TUI Group announced the end of talks with Etihad about the planned new leisure airline combining TUIfly with NIKI, the Austrian subsidiary of the Air Berlin Group. According to TUI, NIKI was "no longer available for a joint venture". Etihad, whose appetite for equity investments appears to be waning, said it ended the talks after the parties had been "unable to reach agreement on the final nature of such a joint venture". The new leisure airline was still subject to regulatory approval, but the collapse of the deal was a surprise.

TUI remains open to partnerships, including mergers, for TUIfly, which lacks scale in a German market increasingly penetrated by foreign LCCs such as Ryanair. The sale of NIKI was to have been a further critical stage in airberlin's restructuring. Instead, an enlarged NIKI will continue to operate as part of the Air Berlin Group as a separate leisure brand.

It seems likely that airberlin will seek another buyer for NIKI, which has gained in size and profile, but this is an unwelcome distraction from focusing on its core network airline. It also means that the perennial loss-maker will need to replace the sale proceeds that it would have gained.