Germany's Air Berlin has firmed a cross-ownership agreement with TUI Travel carrier TUIfly, through which the carriers will hold 19.9% of one another.

Under the agreement city routes operated by TUIfly will be transferred to Air Berlin from the winter 2009-10 schedule and be operated under its flight numbers.

TUIfly's fleet of 38 aircraft will be split, with 17 jets shifting to Air Berlin under long-term wet-lease.

Terms of the tie-up have not been disclosed but Air Berlin previously stated that it would issue new shares to permit the acquisition. The current share price of Air Berlin suggests a transaction worth €40-50 million ($53-66 million).

Air Berlin says the agreement gives it access to three "highly interesting" markets - Cologne, Stuttgart and points in Italy - and says: "In this manner we can expand our European as well as our domestic route network, which is especially important to our business passengers.

"At the same time the position of TUIfly and Air Berlin will improve in this challenging economic environment."

While TUI Travel admits there will be job losses as a result of the deal, it says these will be kept to "very few".

Air Berlin's supervisory board, and its counterparts at TUI Group and TUI Travel, have already approved the partnership.

TUIfly 737-800

While the agreement has yet to receive regulatory approval, Air Berlin says it expects the arrangement will be effective from 1 October.

"Until then, nothing will change for the customers of both airlines," it says.

The tourism operation will use the remaining 21 aircraft in the TUIfly fleet and will continue to be marketed under the TUIfly brand.

TUI Travel chief Peter Long says the agreement will "optimise" its tour operator programme in Germany and "minimise disruption" to TUIfly.

Source: Air Transport Intelligence news