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Air Berlin looks to unload its loyalty air miles program on Etihad for quick cash

Skift Take

The loyalty program is one of a few important assets Air Berlin can leverage to stem losses without impacting flyers who can already redeem miles with either airline through a code-share agreement.

— Samantha Shankman

Air Berlin Plc is in talks to sell its frequent-flyer program to partner and shareholder Etihad Airways. Analysts said the move could be seen as a way to boost investment as the German carrier struggles to stem losses.

Air Berlin said Nov. 15 it would seek to realize the value of the Topbonus loyalty program, and Etihad is the focus of talks, according to spokesman Matthias Radowski. He commented after Austria’s antitrust authority disclosed the negotiations and said the Gulf carrier planned to take “sole control.”

Etihad holds a 29 percent stake in Air Berlin as part of a policy of investing in smaller operators to help feed long-haul flights and turn Abu Dhabi into an inter-continental travel hub. The German company is closing routes and pondering job cuts as it works on details of the second savings program in 12 months in a drive to post the first annual profit since 2007 next year.

“Every other possible partner probably sees a question-mark over Air Berlin’s ability to survive,” said Juergen Pieper, an analyst at Bankhaus Metzler in Frankfurt who recommends selling Air Berlin shares. “It’s clearly an emergency measure.”

Etihad, the third-biggest Gulf carrier, raised its stake in Air Berlin via a $350 million equity deal including funds for new planes that was agreed late in 2009.

The airlines also code-share and allow passengers to redeem air miles on each other’s loyalty programs.

“Etihad Airways is in discussions with Air Berlin over the future of its frequent flyer program,” the Middle Eastern company said today in a statement. “Further details will only be communicated once these discussions are concluded.”

Air Berlin, Europe’s third-biggest discount carrier, traded 0.7 percent higher at 1.36 euros as of 4:14 p.m. in Frankfurt.

The stock has slumped 46 percent this year, reducing the company’s market value to 159 million euros ($208 million). It also declined during the previous five years.

Editors: Chris Jasper and Chad Thomas.

To contact the editor responsible for this story: Alex Webb at awebb25@bloomberg.net. To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net.

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