In reports coming from Italian media (Italian newspaper Il Messaggero) this morning, it appears that Lufthansa and Etihad are discussing a merger that would combine the 2 airlines.

As of now, the discussions are said to revolved around 2 options.   One being Etihad taking a 40% stake in Lufthansa and the other being a complete merger of the 2 carriers.

This news is just reaching the wires and has not been substantiated by either side, so there may be more smoke than fire to this development.  However, LH and Etihad have been working closely together when dealing with Air Berlin, so it should come as no surprise that their conversations may have expanded to included a larger relationship.

There is a myriad of regulatory hurdles that would have to be cleared in order for any serious deal to take place.   These regulations limit foreign ownership of a European carrier as well as other restrictions, so it may not be as easy to accomplish as the press would like you to believe!

Stay tuned!