Auf Wiedersehen Air Berlin: flights to cease this month

BERLIN (Reuters) - Flights operated by insolvent German carrier Air Berlin (AB1.DE) will end by Oct. 28 at the latest, it said on Monday, urging staff to seek jobs elsewhere while it works toward a carve-up of its assets.

Air Berlin filed for insolvency in August and a government loan is keeping its planes in the air to give it time to negotiate with investors for parts of the business.

Talks with Lufthansa (LHAG.DE) and easyJet (EZJ.L) are due to run until Thursday and once a deal for parts of its business has been agreed Air Berlin will have to wind down the rest of the operation.

German deputy economy minister Matthias Machnig said he is confident a deal will be reached on Thursday.

"After purchase contracts have been agreed, the company must end its own operations step by step," Air Berlin said in a statement.

Air Berlin's Niki, which flies to tourist destinations, and regional airline LG Walter are not insolvent and will continue to run, the company said. It will also continue to fly 38 planes as part of a wet lease deal, under which Lufthansa rents crewed planes from Air Berlin mainly for its Eurowings brand, until competition authorities have approved the sale of assets.

Most Air Berlin long-haul flights have already been canceled and the remainder will end on Oct. 15.

Lufthansa is interested in Air Berlin operations with about 81 planes, including Niki and LG Walter, while easyJet is in talks for parts of the business with about 27-30 planes, Air Berlin administrators have said.

Those operations also include access to take-off and landing slots at Air Berlin's hubs in Tegel and Duesseldorf.

Air Berlin leases its planes, so any bidder will have to fund the aircraft separately. Lufthansa said last month that its board had freed up 1 billion euros ($1.17 billion) to invest in new planes for Eurowings, which it said were likely to come from Air Berlin.

However, a newspaper reported on Monday that talks with easyJet may not result in a deal after the British carrier reduced its offer.

Analysts and industry experts have said that easyJet could be interested in slots made available at London Gatwick after the collapse of British holiday airline Monarch, which was grounded last week.

EasyJet has already encouraged crew made redundant by Monarch last week to apply for positions at the budget carrier.

On Monday Air Berlin said its staff would not all find jobs with the potential buyers of its assets and they should start looking for jobs.

Eurowings has already opened up vacancies for 1,000-plus pilots, cabin crew and ground staff and said on Friday that it had received more than 2,500 applications from around the world, about half of which were from pilots.

(Reporting by Victoria Bryan; Additional reporting by Klaus Lauer and Gernot Heller; Editing by David Goodman)