Air Berlin and Abu Dhabi-based Etihad, its biggest shareholder, were granted temporary permission a year ago for code-sharing on more than 30 flights, which enables them to book seats on each other’s planes and split revenue.

Bloomberg/Berlin/Dubai

Air Berlin’s code-sharing partnership with Gulf carrier Etihad Airways is in doubt beyond Sunday after Germany’s Transport Ministry said talks with the UAE on an aviation agreement have failed to produce results.
Current flight-rights accords between the two countries don’t cover code-sharing, and UAE negotiators haven’t come up with a solution, the German ministry said. The head of the UAE’s airline regulator said he disputed Germany’s interpretation of the rules.
Air Berlin and Abu Dhabi-based Etihad, its biggest shareholder, were granted temporary permission a year ago for code-sharing on more than 30 flights, which enables them to book seats on each other’s planes and split revenue. While the clearance expires when the winter timetable begins Sunday, the airlines have already been selling code-share tickets for the new schedule. The German company’s labour representatives told government officials that blocking the sales-sharing deal’s extension will put Air Berlin’s existence at risk, according to a letter to North Rhine-Westphalia state Transport Minister Michael Groschek obtained by Bloomberg.
The UAE views its current airline-rights agreement as allowing code-sharing, Saif al-Sowaidi, director general of the country’s General Civil Aviation Authority, said by phone.
“The German interpretation of the code-share issue is incorrect, and we can support our point of view,” al-Sowaidi said.
Both al-Sowaidi and the German Transport Ministry said they remain open for talks. Tobias Spaeing, an Air Berlin spokesman, declined to comment on the ministry statement or on any plans for how the tickets for coming months will be dealt with if the clearance ends.
Air Berlin has reported an annual profit only once in the past seven years. Chief executive officer Stefan Pichler said in July that the carrier will still post a loss in 2015 as a turnaround effort will take six to nine months to bear fruit.
Revenue from code-sharing about matches the €140mn ($159mn) the airline pays yearly in German aviation taxes, so cancelling the rights could result in the airline’s collapse, Air Berlin’s works council leaders said in the letter. Copies of the document were also sent to German Chancellor Angela Merkel, Vice Chancellor Sigmar Gabriel and federal Transport Minister Alexander Dobrindt, a person with knowledge of the situation said. “From a German perspective, there is no winner in this scenario” of halting code-sharing operations, the labour leaders wrote. Low-cost carriers including Dublin-based Ryanair Holdings and Luton, England-based EasyJet would fill the void, making it harder for Germany’s Deutsche Lufthansa to compete, they said.
Etihad has used the flights to offer more connections in Germany as it competes with Dubai-based Emirates and Qatar Airways for transfer passengers to and from Germany.