Lufthansa negotiates takeover of Swiss Air
(Agencies)
Updated: 2005-03-14 09:10

German carrier Lufthansa said Sunday it was negotiating with Swiss International Air Lines about a possible takeover of the money-losing carrier.

In a statement, Lufthansa described the talks as "constructive" and said the two companies had come up with a business plan to integrate Swiss into its operations. It said "pillars" of any deal would be keeping Switzerland's air connections and the Swiss brand.

An airplane of the German airline Lufthansa rolls in front of an airplane of the Swiss International Air Line, on Unique Zurich Airport in Kloten, Switzerland, June 4, 2004 file picture. [AP/file]

"The business plan that has been developed by the two companies must still be approved by the Lufthansa board of directors, the board of Swiss and Swiss shareholders," the statement said.

Should the plan meet with board approval, Lufthansa said it would make an offer to buy out smaller investors based on Swiss stock's average price in recent weeks.

Swiss posted a net loss of 140 million francs ($118 million) for 2004, compared with a loss of 687 million francs in 2003. The company released audited results for 2004 on Friday, in line with the unaudited figures it issued last month.

The company has suffered massive financial problems since it was created out of the defunct Swissair in 2002, and has announced a string of cost-cutting programs.

Only Friday, Swiss CEO Christoph Franz said the company needed to return to profitability before making a deal with another airline.

Still, speculation of a merger has prompted Swiss' shares to climb. The stock closed up 19.5 percent at 10.40 francs on Friday in Zurich.

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