(Bloomberg) -- TUI AG sought to reassure 2,000 workers at its German airline arm that a merger with the tourism unit of Air Berlin Plc would see the carrier retain its base in Hanover and continue to provide flights for the world's largest holiday company.
Jochen Buentgen, managing director of the TUIfly airline unit, wrote to staff Monday saying the enlarged business would also retain existing labor accords and that he would put himself forward to run its operations. A copy of the letter was obtained by Bloomberg News.
A wave of absenteeism disrupted TUIfly services for a second day Tuesday after Air Berlin said last week that it was seeking a “strategic solution” for its tourist operation. Buentgen's memo confirmed that talks are underway between TUI and Air Berlin shareholder Etihad Airways PJSC on a possible combination of the assets.
In an earlier letter, also obtained by Bloomberg, Henrik Homann, who has responsibility for TUI's six airlines, told employees the company has “too much flight capacity” operating “at a cost significantly higher than market prices.” That makes a partnership with Air Berlin an “attractive option.”
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A combination would bring together TUIfly's 27 planes, 19 from Air Berlin's Austrian subsidiary Niki, which employs 840 people, and 14 that the TUI unit operates on behalf of the Berlin-based company under a 10-year lease deal. Air Berlin is separating out its tourism operation after splitting into three, with another unit operating 40 planes for Lufthansa and its main arm keeping 75.
TUI tried unsuccessfully to merge unprofitable TUIfly with Deutsche Lufthansa AG's Germanwings arm in 2008, and with Air Berlin in 2009. An internal combination with TUI's U.K. airline Thomson also failed about two years ago.
The Ver.di union said it opposes any deal that would mean the new company would be run by Etihad, or involving cuts to pay and benefits. Staff at Niki earn about 20 percent less than those at TUIfly, it said.
To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net. To contact the editors responsible for this story: Chris Reiter at creiter2@bloomberg.net, Christopher Jasper
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