Lufthansa (LH, Frankfurt International) is in talks with SAS Scandinavian Airlines (SK, Copenhagen Kastrup) over the possible extension of its Eurowings (EW, Düsseldorf) brand to the Scandinavian operator.

Informed sources told Reuters that Lufthansa had been in talks with SAS since the autumn which could lead to the Germans taking a stake in SAS or some other kind of partnership which may involve its Eurowings regional and international budget brand.

In February, Lufthansa CEO Karl Ulrich Garnadt alluded to similar plans for Brussels Airlines (SN, Brussels National). At the time, Garnadt said that in the event Lufthansa was able to secure the remaining 55% in Brussels Airlines held by SN Airholding N.V./S.A., the stake would be transferred to Eurowings Aviation & Services GmbH (EA&S).

Lufthansa has touted an enlarged Eurowings operation as a panacea to many of the problems legacy European carriers currently face. Aside from its reduced cost base, an enlarged Eurowings would bring with it increased economies of scale as well as access to a common IT, network planning, and reservations platform all of which would help enhance overall profitability.

Europe's carriers have found it increasingly difficult to turn a profit in the European market where domestic and regional services are dominated by budget carriers such as Ryanair (FR, Dublin International), easyJet (London Luton), Wizz Air (W6, Budapest) and Norwegian (Oslo Gardermoen) while longhaul is under threat from Emirates (EK, Dubai International), Etihad Airways (EY, Abu Dhabi International), Turkish Airlines (TK, Istanbul Airport), and Qatar Airways (QR, Doha Hamad International).