Lufthansa Discloses Talks to Buy Ailing Swiss Carrier

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

Lufthansa issued a statement saying the companies had agreed on a plan to integrate Swiss into its operations. The German carrier said it would maintain Swiss’ brand name as well as its “infrastructure” in Switzerland.

If the plan is approved by Swiss’ shareholders and the boards of both companies, Lufthansa will make an offer to buy out smaller investors based on Swiss’ average share price in recent weeks, the statement said.

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 Chief Executive Christoph Franz said the company needed to return to profitability before making a deal with another airline.

Still, speculation of a merger prompted Swiss’ shares to climb 20% on Friday in Zurich trading.