TUI seeks cost cuts at airline Tuifly - paper

FRANKFURT, Jan 13 (Reuters) - German travel and tourism group TUI AG (Xetra: TUI1.DE - news) aims to cut costs at its airline Tuifly by 65 million euros ($88.9 million) each year by cutting back on free services for passengers and lowering staff costs, a German newspaper reported.

In exchange for cost cuts under the new programme - dubbed "Max Thrust" - TUI Travel (LSE: TT.L - news) parent TUI will expand the fleet by four new aircraft for medium-haul flights and two planes for long-haul, daily Sueddeutsche Zeitung said on Monday, citing unnamed sources.

Tuifly plans to split its cabin into three different classes from May and stop offering passengers newspapers, inflight entertainment and blankets, it said.

That will account for 30 million euros of cost cuts and the rest is to come from workers' concessions, it said.

"We are currently in talks (with labour representatives) that we want to conclude in the coming weeks," it cited Tuifly chief Dieter Nirschl as saying, adding he declined to comment on details of planned cost cuts.

Sueddeutsche said workers were being asked to do without pay raises and contribute to savings with early retirements. It said Tuifly was also considering shifting at least some of its 350 maintenance jobs to Romania.

Tuifly has 550 pilots and over 1000 flight attendants, according to the company's website.