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TUI and ESAS buy into Air Berlin

TUI Travel has acquired a 19.9 percent share in the Europe’s third largest low-cost carrier, Air Berlin, for €64.8m, in a strategic alliance deal that will also see Air Berlin taking over operations of TUI’s struggling German airline operations, Hapag-Lloyd Flug and Tuifly.

The announcement comes the day after a separate deal between Air Berlin and ESAS Holdings, a Turkish conglomerate, for a 15.3 percent in Air Berlin formerly held by U.S. billionaire Len Blavatnik. The two deals end months of speculation over the future ownership of the budget carrier.Air Berlin also released its 2008 results, showing a fall in operating profit to €14.2 million from €21.4 million in 2007, which was inline with forecasts.

The Turkish group ESAS Holding has a wide range of interests in aviation, healthcare, property, and will gain one seat on the Air Berlin board. It also owns Pegasus Airlines, Turkey’s second largest carrier.
Mr Blavatnik, previously the largest shareholder in Air Berlin, bought into the airline only in May 2008 but saw the carrier’s share price slump 40 percent as the huge spike in fuel prices and subsequent recession hit the aviation industry.
TUI Travel is paying €3.97 a share, which represents a premium to Friday’s closing price of €3.08, although the shares have since soared by over 12 percent in early trading.
The strategic alliance deal with Tui Travel will see Air Berlin take a 19.9 percent stake in TUI’s struggling German airline operations, Hapag-Lloyd Flug and Tuifly.
Air Berlin will take over the operation of Tuifly’s scheduled route network, and fly under the Air Berlin brand from the start of the next winter season at the end of October.
Tuifly will retain control of the TUI’s German charter operations with the remaining 21 aircraft flying for its holiday tour operations under the Tuifly brand.
The cross-shareholding deal, which is subject to approval by the competition authorities, is due to take financial effect from October 1.