MILAN • Germany's Lufthansa and Etihad Airways are in talks to possibly merge the two airlines, Italian newspaper Il Messaggero said in an unsourced report yesterday, boosting the German airline's share price.

According to the paper, managers from both companies have for weeks been examining the possibility of Etihad buying a 30 per cent to 40 per cent stake in Lufthansa through a sale of new shares to the Abu Dhabi state-owned airline.

In a second step, the two airlines would look at a full-blown merger, the paper said, adding that the parties would meet shortly to speed up the talks.

Lufthansa and Etihad declined to comment on what they described as "speculation".

Lufthansa and Etihad last month signed a flight code-sharing deal after Lufthansa agreed to lease 38 crewed planes from Air Berlin, which is part-owned by Etihad.

Analysts reacted with scepticism to the report, citing the foreign ownership rules governing international traffic rights, and questioning what the benefits for Lufthansa would be.

REUTERS