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UPDATE 1-TUI, Etihad abandon plans to form new leisure airline

* TUI says remains open to partnerships, joint ventures

* Etihad says Air Berlin leisure to remain independent

* Air Berlin to announce details of new structure (Adds Etihad statement, background, shares)

FRANKFURT, June 8 (Reuters) - Abu Dhabi-based Etihad Airways said on Thursday it had pulled out of talks with TUI Group , Europe's largest tour operator, aimed at creating a new joint venture holiday airline.

Under plans outlined last year TUI's own airline TUIfly was to be merged with Air Berlin's leisure airline Niki once Niki was bought out of Air Berlin by Etihad. The Gulf airline has a near 30 percent stake in Etihad.

Etihad said on Thursday that it was not able to reach agreement on the final nature of the joint venture despite "many months of negotiations," while TUI said Niki was "no longer available" for a deal.

"A strong European leisure airline continues to make great strategic sense. After all, the aviation sector is characterized by overcapacity in Germany," TUI's executive board member Sebastian Ebel said in a statement.

"However, Niki is no longer available for a joint venture. We will push the repositioning of TUIfly further ahead in order to develop long-term prospects for the airline and its employees," Ebel added.

TUI said it remained open for partnerships and joint ventures.

As part of the deal Etihad was planning to buy Niki from Air Berlin before combining the business with TUIfly.

Air Berlin had already received 300 million euros ($337 million) from Etihad for Niki, according to Air Berlin's annual report.

But Etihad said in the statement the leisure operations of Air Berlin group would now continue to operate as a separate business unit, under the Niki brand.

"Further details of this structure will be announced in due course by Air Berlin," Etihad said.

Air Berlin did not immediately respond to requests for comment. Shares in TUI AG were down 0.3 pct at 1,154 euros by 1037 GMT, while Air Berlin's shares were up 2.8 percent at 0.929 euros. ($1 = 0.8904 euros) (Reporting by Harro ten Wolde; Editing by Greg Mahlich)