TUI plans new strategies for its German airline subsidiary TUIfly

Published on : Friday, September 1, 2017

TUIflyThe Air Berlin liquidation is forcing TUI to plan a new future for its German airline subsidiary TUIfly with questions rising over its cost structure and what can be done with one third of its fleet.

 
TUIfly is again facing an uncertain future just two months after talks over a possible merger with Air Berlin’s leisure airline Niki broke down. That deal would have combined TUIfly’s 42 jets with 17 Niki-operated planes to create a major European leisure airline, with TUI only holding a minority stake. However, TUI said its German airline would operate as a standalone carrier in future but remained open for partnerships.

 
But the insolvency of Air Berlin has now changed the scenario once again. The most pressing issue for TUI is what happens to the 14 B737 planes that it has wet-leased to Air Berlin as part of 10-year contract, and which are currently flying under Niki colours. The contract will come to an end in 2019.

 
However, the German tourism group does not want to expand TUIfly’s own fleet and routes by taking back the planes. TUI is therefore interested in any Air Berlin investors continuing to use the TUIfly planes, even at lower leasing rates.

 
The TUIfly fleet has 42 planes, with 14 jets wet-leased to Air Berlin/Niki and the remaining 28 planes mostly used to fly TUI Germany customers to short-haul and medium-haul destinations in and around the Mediterranean. Last year, the airline had a loss of €40 million.

 
The German leisure airline market has been under pressure for many years due to over-capacity, powerful price competition and expansion of low-cost carriers in the beach holiday destination business.

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