Etihad and Lufthansa eye merger, while other airlines face big changes

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A few interesting snippets out of the major airlines this week. Hot off the press is a report that Etihad might merge with Lufthansa.

Apparently the carriers have been looking at the possibility of Etihad buying up to 40% of Lufthansa through a sale of new shares. Or the pair could examine a full merger.

But foreign ownership rules, as well as German takeover rules, make the suggestion “rather implausible”, according to Barclays analysts.

And so far there has been no further word on pre-Christmas reports that Etihad chief James Hogan is on his way out.

Another carrier contemplating a change of ownership is Qatar Airways.

Chief Akbar Al Baker said in an interview last week that the carrier could be privatised in the next 10 years – and that it should be valued at more than $10bn. It had planned an IPO in 2010, but it had to scrap it following the financial crisis.

Meanwhile AF-KLM has extended its joint-venture with Alitalia, which was due to have expired on 13 January. The airlines are still looking for a mutually agreeable deal, despite Alitalia’s attempts to cancel the partnership. Alitalia wants its Milan-Linate slots back – AF-KLM wants to keep them.

Finally comes news from Brazil, which is drafting a decree which would allow 100% foreign ownership of airlines.

The government relaxed the law last year, briefly lifting the limit to 49% from 20% – only for this to be vetoed and sent back to 20%.

The new draft also calls for subsidies on routes in less-populated areas, in a move which would give smaller – or Embraer – aircraft an advantage over those operating Boeing or Airbus.

There are a handful of cargo airlines in Brazil which could be acquired by foreign owners, if the draft goes through this month. Sideral Air Cargo, which is adding a maiden 727-200F to its fleet; COLT Cargo, a 737F and 757F operator; 727F carrier Total Linhas Aéreas; and Rio Linhas Aéreas are among the local carriers.