Lufthansa in talks for equity stake in Brussels Airlines

German flag carrier, Lufthansa, said it is in "constructive negotiations" with SN Airholding, parent of Brussels Airlines, for an 45% equity investment in the Belgian company. It said its offer also includes  an option to eventually take over the carrier fully.

The carriers said in a joint statement that negotiations are intended to produce "a collaboration with Brussels Airlines as a self-dependently operating airline within the Lufthansa affiliated group." It also said that negotiations are expected to conclude "over the next few weeks."

The confirmation follows speculation of a tie-up last spring after Brussels Airlines chairman, Etienne Davignon, acknowledged that SN was negotiating an alliance membership. He had said then, without naming Lufthansa, that "a possible financial participation of a new shareholder could only be considered under the condition that the sustainable future, the identity and the autonomy of Brussels Airlines are guaranteed."

The proposal under consideration would have Lufthansa acquire 45 per cent of SN Airholding for about €65 million ($95.6 million) through a capital increase and retain an option for the remaining 55 per cent that could be exercised after two years.

The price would be linked to SN's performance.

Virgin Group is SNA's largest shareholder at 29.9% as a result of the merger of Brussels-based LCC Virgin Express with full-service competitor Brussels Airlines in 2006.

Lufthansa's is also bidding for the Austrian government's stake in Austrian Airlines Group. It is also talking with TUI Travel and Thomas Cook Group about a possible alliance of their low-fare subsidiaries.