TUIfly Grounded as Staff Protest Merger Amid Airline Turmoil

  • German holiday giant scraps 108 flights across its network
  • Spat over Air Berlin deal caps bleak weak for European sector

TUIfly, the German airline arm of the world’s biggest holiday company, scrapped most of its flight schedule Friday as crews called in sick to protest merger plans with a struggling peer, ending a week of turmoil for European carriers straining under overcapacity and slumping demand.

The unit of TUI AG canceled 108 services, disrupting travel for 9,700 people, while chartering planes from other airlines to rescue holidaymakers stuck abroad. The “sickout” comes as TUI mulls a combination of its German fleet with the leisure operations of Air Berlin Plc, which is itself slashing jobs as part of a broader overhaul and where 50 flights were also halted today.

TUI later said that following talks with labor representatives its supervisory board won’t now reach a decision on the plan until mid-November, instead of Oct. 26 as previously suggested, to help calm the situation.

TUIfly’s grounding caps eight days that have roiled European aviation as stuttering economies, a wave of terror attacks and Britain’s vote to quit the European Union undermine demand. The turmoil started last Thursday when Air Berlin said it would cut its fleet by half, split into three and dismiss 1,200 workers. EasyJet Plc yesterday reported its first annual profit decline since 2009, while Monarch Airlines Ltd. is seeking the biggest bailout in its history as it seeks to stem losses and extend its operating license.

The developments highlight the threat even to well-established airlines as demand ebbs and fares fall while the industry keeps adding seats. Leisure operators and the few flag carriers still outside Europe’s big three network groups appear most exposed, with David Neeleman, an investor in Portugal’s TAP, warning last week that discount specialists were “eating up” its market.

Michael O’Leary, chief executive offer at Ryanair Holdings Plc, Europe’s biggest discount carrier, has said he expects a new wave of consolidation and failures that could reduce the industry to just five major players.

Gathering Pace

Protests at TUIfly have gathered pace since Monday, affecting more flights each day, with 32 scrapped Wednesday and 60 Thursday before today’s near wipeout. Both pilots and flight attendants are calling in sick, the airline said.

Parent TUI has sought to reassure the 2,000 workers at the unit, saying a merger with Air Berlin’s leisure operations would see the enlarged carrier -- which would have 60-plus aircraft -- retain its base in Hanover, keep existing labor accords and continue to provide flights for the holiday company.

Labor groups say they’re opposed to any deal brokered without their consent, with Martin Locher, a TUIfly pilot and official at the Vereinigung Cockpit union, warning two weeks ago that any unilateral agreement would be met with unspecified “resistance.”

Air Berlin’s operations have also been disrupted, since it relies on TUIfly to supply 14 aircraft, including pilots.

The Berlin-based carrier, which is partly owned by Etihad Airways, has turned to its partners in the Abu Dhabi-based group’s so-called equity alliance for help. Etihad is providing an Airbus Group SE A340 wide-body jet, and Air Serbia and Italy’s Alitalia SpA are also supplying emergency aircraft.

321 Flights

All told, some 321 flights have been scrapped at TUIfly and Air Berlin this week, upsetting the travel plans of tens of thousands of passengers.

The Ver.di union said separately Friday that it discussed conditions for staff at Air Berlin this week, after the carrier said it wants to re-base labor costs for remaining employees. The talks will continue next week, the union said, without providing details.

Air Berlin is splitting into three -- the main business, the leisure arm that may merge with TUIfly, and a 40-aircraft division that will operate flights for Deutsche Lufthansa AG under a five-year contract due to start next year.

TUI shares closed 3.1 percent lower at 12.37 euros in Frankfurt, EasyJet lost a further 4 percent after tumbled 6.9 percent Thursday following its earnings announcement, and Air Berlin slipped 0.1 percent.

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