UPDATE 1-Etihad loses bid to keep some Air Berlin code-share flights

* Court decision affects 31 code-share routes

* Court says routes not covered by traffic agreement

* Decision covers period Jan 16-March 26 (Adds comment from Etihad, transport ministry)

BERLIN, Dec 30 (Reuters) - Gulf airline Etihad has lost a court decision in Germany over the right to jointly sell tickets for some routes operated by Air Berlin this winter, dealing a blow to the loss-making German carrier and its largest shareholder.

The row was over 31 routes that Etihad wanted to market under a code-sharing agreement with Air Berlin, which would enable the Abu-Dhabi based carrier to sell tickets to more destinations in Europe and give Air Berlin, 29 percent owned by Etihad, access to more customers.

The court said on Wednesday Etihad could not continue to add its code to the routes because they were not covered by the current air traffic rights agreement between Germany and the United Arab Emirates (UAE). The decision applies to the period from Jan. 16 to the end of the winter schedule on March 26.

Etihad said it would appeal against the decision early next week, adding the ruling would cause “significant” social and economic damage to Germany by reducing competition and choice for passengers.

Etihad has previously said the code-share routes were a key reason it invested in Air Berlin and that failure to approve them could result in severe damage to Air Berlin, which is in the midst of a restructuring to cut debt and return to profitability.

Of the disputed routes, 29 had previously been approved by the transport ministry on several occasions since 2012.

But the ministry in August 2014 changed its stance, saying they were not covered by a traffic rights agreement between Germany and the UAE, which permits UAE carriers to fly to only four airports in Germany, not including the capital Berlin and where Air Berlin is based.

The transport ministry, which had approved the disputed code-shares until Jan. 15 for what it said would be the final time, has suggested the two carriers restructure the code-shares, such as by changing them into so-called interlining agreements. These are a step down from code-shares and would mean the Etihad code being removed from Air Berlin’s scheduled flights.

The ministry said on Wednesday Air Berlin had had plenty of time to prepare since August 2014 and Germany had repeatedly offered the UAE talks to clarify the situation.

The decision does not affect a further 50 Air Berlin-Etihad code-share routes that had been approved by Germany. (Reporting by Victoria Bryan; Editing by Christoph Steitz and Mark Potter)