Lufthansa is in talks with the loss-making Scandinavian carrier SAS over a possible takeover.
The talks began after SAS approached the German carrier about a possible buy up in May, Reuters reported.
Half of SAS is jointly owned by the governments of Sweden, Norway and Denmark with the rest in private hands.
The two airlines also each own substantial stakes in the British carrier bmi, which has also been the subject of takeover speculation.
While neither side has confirmed formal talks, SAS said in a statement last Friday that it was ”in the process of evaluating various structural possibilities for the Group.
”Within this process SAS is conducting talks about a possible structural solution.”
But the airline stressed that no decision has been made.
Reuters quoted Sylvia Brustad, Norway”s trade and industry minister, as saying: "We are aware that SAS is considering whether it is an advantage to bring in other owners."
The Danish government said it was in favour of a sale to a private investor.
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