TUIfly pay, conditions remain in place; planes grounded

FRANKFURT (Reuters) - German travel and tourism company TUI AG (TUIG.L) said it would keep pay and conditions in place for three years for employees of its TUIfly airline unit, amid talks on merging TUIfly with loss-making carrier Air Berlin's (AB1.DE) leisure business.

TUI said in a statement on Friday it would delay its decision on the future of TUIfly until mid-November but pledged to keep its headquarters in Hanover for at least three years.

Pilots and crew at TUIfly have been calling in sick this week, forcing the cancellation of dozens of flights, following news of plans to merge TUIfly and Air Berlin's leisure travel business.

TUIfly late on Friday said it would cancel most of its scheduled service for Saturday, with 118 flights affected, though it added it was working to organise extra flights.

The airline said in a statement it planned to return to its full schedule on Sunday with 115 flights, although delays could not be excluded.

Workers at TUIfly are concerned that a combination with part of Air Berlin in a holding led by Abu Dhabi-based Etihad, Air Berlin's biggest shareholder, could mean job and pay cuts, union Verdi said this week.

Talks between TUI and employee representatives are due to resume on Monday, TUI said.

(Reporting by Jonathan Gould; Editing by Georgina Prodhan)