Etihad, Lufthansa in talks to merge airlines: Paper

Two airlines would look at a full-blown merger to create a carrier with 97 mn passengers a year

Germany's Lufthansa and Etihad Airways are in talks to possibly merge the two airlines, Italian daily Il Messaggero said in an unsourced report on Tuesday.

According to the paper, managers from both companies have for weeks been examining the possibility of Etihad taking a 30-40 per cent stake in Lufthansa via a capital increase reserved for the Abu Dhabi state-owned airline.

In a second step, the two airlines would look at a full-blown merger to create a carrier with 97 million passengers a year, the paper said. It added the parties would meet shortly to speed up the talks.

A spokeswoman for Lufthansa declined to comment on "speculation". Etihad had no immediate comment.

Any combination between the two would likely have an impact on loss-making Alitalia, which is 49 per cent-owned by Etihad and is in the midst of a major restructuring that will likely include job cuts and grounding of planes.

Lufthansa shares were up 3.9 per cent on Tuesday morning, topping the DAX index of largest German companies.

Lufthansa managers have repeatedly said in recent weeks in response to questions about consolidation that the group currently has its hands full integrating 38 crewed planes being leased from Air Berlin, which is part-owned by Etihad, plus taking over Brussels Airlines.