Lufthansa and Etihad are looking at options to merge, Italian newspaper Il Messaggero said Tuesday, without citing sources.
Frankfurt-listed Lufthansa, Europe's largest airline by revenue, said the report was "speculation" and declined further comment, while Etihad, the United Arab Emirate's national flagcarrier, declined to comment when contacted by news agency Reuters.
On Tuesday afternoon, a Lufthansa insider told Reuters there wasn't any talk of the United Arab Emirate's national carrier taking a stake in Europe's largest carrier.
Lufthansa’s shares rose as much as 7.3 percent but trimmed gains after the Reuters denial, trading up 3.2 percent €11.68, or $12.50, by 4:48 P.M. local time in Frankfurt.
The German carrier has struggled to compete against low-cost airline firms such as Ryanair and EasyJet, while Etihad’s investments in European airlines have proved costly and unsuccessful, damaging its premium brand.
Managers from both companies have for weeks been examining the option of Etihad taking a 30-40 percent stake in Lufthansa via a capital increase reserved for the Abu Dhabi state-owned airline, Il Messaggero reported on Tuesday morning.
At a second stage, the two companies would examine a full-blown merger, the newspaper said. It added the parties would meet to speed up the talks.
When asked in recent weeks about consolidation, Lufthansa managers have said repeatedly that the carrier has its hands full integrating 38 planes and crews leased from Air Berlin, which is part-owned by Etihad, plus taking over Brussels Airlines.
Gilbert Kreijger is an editor with Handelsblatt Global. To contact the author: [email protected]