Tour operator TUI Travel's discussions over a possible co-operation between in-house carrier TUIfly and Germany's Air Berlin have reached an advanced stage.
The company's update on the negotiations, revealed earlier this month, has accompanied the disclosure of first-quarter results for TUI Travel and full-year results for TUI Group.
Talks over the proposed tie-up with Air Berlin are "progressing well" and are "at an advanced stage", says the UK-based tour firm.
Discussions are centred on a deal under which TUIfly would hand city routes to Air Berlin and TUI Travel would acquire, in return, up to 20% of the German airline.
TUI Travel's first-quarter figures show it has reduced underlying operating losses by 45% to £35 million ($51 million) while revenues were up 9% to £2.7 billion.
The company is "encouraged" by stronger business in the UK but says its Nordic activities were affected by unrest in Thailand, and it has also had to cope with excess capacity in Canadian markets.
Rationalisation of flight capacity in Germany has improved airline load factors and yields, but French activity has been hit by problems in Guadeloupe, Martinique and Madagascar.
TUI Travel chief Peter Long says the company will benefit from "significant" synergies this year and is "well-positioned" to meet full-year expectations.
While the company contributed underlying operating earnings of €453 million ($612 million) to the full-year figures of TUI Group, the group posted an overall full-year loss of €142 million which it attributes to high integration costs of €440 million incurred by TUI Travel.
Source: Air Transport Intelligence news
