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This is an archive article published on March 15, 2005

Lufthansa negotiating to acquire Swiss International Airlines

Lufthansa said on Sunday that it was in talks to take over Swiss International AirLines, a long-rumoured deal that would speed the consolida...

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Lufthansa said on Sunday that it was in talks to take over Swiss International AirLines, a long-rumoured deal that would speed the consolidation of Europe’s national carriers.

Deutsche Lufthansa, the airline’s parent company, confirmed in a statement that it was engaged in ‘‘constructive negotiations about the takeover and integration of Swiss into the Lufthansa group.’’

Lufthansa said it would make an offer, based on the average recent trading price of the airline’s stock, once it had received approval from the boards of the two companies, as well as principal Swiss shareholders, which include the government and the two largest Swiss banks, UBS and Credit Suisse.

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Several potential stumbling blocks to a deal already appear to have been surmounted. Lufthansa said Swiss would retain its brand name as well as flight connections from its main hub in Zurich.

With Lufthansa operating hubs in Frankfurt and Munich, each less than an hour’s flying time from Zurich, some analysts had questioned whether Lufthansa would seek to downgrade Zurich by funneling Swiss passengers with long-haul connections through the German airports.

Lufthansa said, ‘‘the jointly developed business model aims at providing a concentration of the strengths of both airlines, while retaining the independence of Swiss to the extent possible.’’ For Switzerland, selling the airline to Lufthansa would be a humbling coda to what was once one of the proudest names in commercial aviation. Swissair, the predecessor airline to Swiss International, collapsed in 2001 after a series of ill-conceived investments in other European carriers. Swiss International, which was cobbled together in 2002 from the remnants of Swissair and a commuter carrier, Crossair, has never made money, recording cumulative losses of more than $1.5 billion. It said last week that it needed to reduce its work force by 1,000 people to achieve its first operating profit this year.

Lufthansa made a pass at Swiss International a couple of years ago, but the negotiations petered out, and Swiss set about trying to restore its finances on its own. It also made a lengthy, ultimately fruitless bid to join the OneWorld alliance, which is led by American Airlines and British Airways.

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With fierce competition from low-cost carriers like Ryanair, the pressure to find merger partners has mounted. — NYT

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