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Business

Merger of German Budget Airlines in Question

The planned merger of Lufthansa's subsidiary Germanwings, Thomas Cook-owned Condor and TUIfly could be facing collapse, according to a German news report.

Germanwings plane on the runway

It looks like the merger won't be taking off

The daily Financial Times Deutschland on Thursday, Sept. 4, quoted a source involved in the negotiations as saying that talks were becoming drawn out and a merger of the three airlines was growing increasingly unlikely.

When takeover-talks were announced end of August, they were seen as a further part of the German travel market shake-out. In July, Air Berlin withdrew its interest to take out a stake in Condor, throwing the low-budget airline back on the market.

High fuel prices and declining consumer confidence has increased the pressure on Germany's low-budget airlines during holiday business this summer.

Despite rocketing fuel prices, however, air traffic in Germany, which is Europe's largest travel market, turned in a solid performance during the first half of 2008.

While the number of passengers departing from German airports, slowed by only 0.2 percent to 46.2 billion compared with 2007, domestic traffic recorded a 6.6 percent growth rate.

Since Air Berlin and Thomas Cook cancelled the 700-million-dollar ($480-million) negotiations over Condor in July, the oil price has fallen from roughly 150 dollars per barrel by almost 50 percent, helping to ease the pressure on the budget airline industry.

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