Lufthansa has finally confirmed what had been long rumoured, that it is in talks about a possible takeover of Swiss International.
The German company would offer the average share price from recent weeks to minority shareholders.
The Swiss government holds 20% of the shares. Swiss politician Charles Favre said: “These days there is no alternative, the company needs a strong partner. If, with this bid, they maintain the Swiss destinations and all the routes, then it makes no sense for the Swiss Federal government to keep its 20% holding, and anyway that’s not a very significant stake anyway. In addition, I don’t think the state should be an investor in an airline.”
Swiss has said it needs to return to profitability before making a deal with another airline.
It substantially reduced its losses last year, which is what all European airlines are having to do to stay viable.
Air France-KLM has been cutting costs to compete with Lufthansa and British Airways.
Low cost carriers, like Ireland’s Ryanair, have been expanding on European routes.
Swiss International, which was created from the remains of bankrupt Swissair, and the country’s regional carrier Crossair, said last week that it needs to cuts as many as 1,000 jobs – that is 15% of its workforce – to achieve its first operating profit this year.
Lufthansa plans to buy Swiss as soon as agreement is reached with the company’s main investors, which could come after the next meeting of the Federal government’s cabinet, due to take place at the end of the month.
A spokesman for the German airline said they want to retain Zurich as one of their operating hubs and keep Swiss as a separate brand.