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TUI AG, the world’s largest holiday company, said its German airline unit won’t be sold to U.K. discount operator EasyJet Plc after a board member revealed earlier that a deal was being considered.
“A cooperation with or a shareholding of EasyJet in TUIfly is neither in preparation nor something we aim for,” Henrik Homann, who runs TUI’s airline operations, said in a letter to employees that was also signed by Jochen Buentgen, TUIfly’s managing director.
Martin Locher, a TUIfly pilot who sits on its supervisory board as a labor representative, said earlier that the group was exploring a potential sale of the unprofitable unit to EasyJet and was in touch with a least one other prospective suitor that he didn’t name. TUI’s internal memo, a copy of which was obtained by Bloomberg News, didn’t deny that discussions had taken place.
For EasyJet, buying TUIfly would be a shortcut to boosting the Luton, England-based company’s market share in Germany, where it has limited exposure, while guaranteeing access to route rights within the bloc once Britain exits the European Union. The U.K. carrier declined to comment.
TUIfly operates a fleet of 41 Boeing Co. 737 narrow-body planes and EasyJet has more than 250 Airbus Group SE A320-family jets, so that the two would be an imperfect fit. The German business employs almost 2,000 people and posted a net loss of 45.1 on sales of 860 million euros in the fiscal year ended Oct. 30, after generating profits in earlier years.
TUI, based in Hanover, which is also the hub for TUIfly, has been examining whether it really needs to run in-house airlines in conjunction with its tour-operator activities, and said in 2015 that it planned to bundle its carriers to better compete with discounters such as EasyJet.
TUI’s airline units -- TUIfly, Thomson Airways, TUIfly Nordic, Belgium’s Jetairfly, Netherlands-based ArkeFly and French long-haul carrier Corsair, which it has sought to sell -- have a combined fleet of about 140 aircraft.
TUI Chief Executive Officer Fritz Joussen in April disposed of the group’s online hotel-booking business, and has hired Citigroup to help find a buyer for of its adventure-travel activities.
TUIfly is also tied to Air Berlin Plc., which has lost 1.17 billion euros over the past 3 years and which it supplies with 14 Boeing 737s and crews. Homann and Buentgen said in their letter that TUI must be “prepared to safeguard its economic interest” if the situation at Germany’s second largest airline “continues to deteriorate.”