Air Berlin to hold carve-up talks with Lufthansa, easyJet

FRANKFURT (Reuters) - Air Berlin's creditors have picked German flagship carrier Lufthansa and Britain's easyJet as possible buyers for the insolvent carrier's aviation business and will negotiate with them for the next three weeks.

"Authority was granted to conclude one or more agreements with one or more of these bidders," Air Berlin said in a statement late on Thursday.

Talks over its other Air Berlin assets, such as its aircraft maintenance unit, will continue with other bidders, it said.

Air Berlin, which has about 8,000 employees and operates 144 mostly leased planes, filed for insolvency in August after major shareholder Etihad pulled the plug on funding.

Two sources familiar with the matter had told Reuters on Thursday that Lufthansa was set to pick up a large part of the carrier.

Lufthansa's CEO said earlier that the carrier wanted to secure the 38 crewed planes it leases from Air Berlin, and was interested in a further 20-40 short-haul planes.

Air Berlin said negotiations with Lufthansa and easyJet would continue until Oct. 12, which means Air Berlin's board may not make a final decision on Sept. 25 as had been expected.

The news comes ahead of a national election on Sunday in which Chancellor Angela Merkel is set to win a fourth term.

At a rally in the western city of Neuss, where dozens of Air Berlin workers wearing fluorescent yellow crew jackets joined Merkel supporters, the chancellor said: "There are pilots from Air Berlin that we of course wish all the best to, like all people who have a job and would like to keep it."

The prospect of getting access to Air Berlin's airport slots, planes and crews had drawn interest from those airlines and other investors, including former Formula One driver Niki Lauda, jointly with Thomas Cook's German airline Condor, and aviation entrepreneur Hans Rudolf Woehrl.

Also, two people familiar with the matter had told Reuters earlier this week that British Airways owner IAG had joined the field of bidders for parts or all of Air Berlin.

Bidders had been especially interested in Air Berlin subsidiary Niki, which operates short-haul flights from Germany and Austria to tourist hot spots.

The deadline for bids for its maintenance unit, which has about 850 employees, has been extended to Oct. 6, Air Berlin said.

Lufthansa declined to comment further on Thursday evening. EasyJet declined to comment and Condor was not immediately available for comment.

(Reporting by Ilona Wissenbach; Additional reporting by David Sahl in Neuss; Writing by Victoria Bryan; Editing by John Stonestreet and Stephen Coates)