Lufthansa May Take Equity Stake in United

United Airlines said on Monday its German partner Deutsche Lufthansa AG may take an equity stake in the bankrupt U.S. carrier, while Lufthansa said it was still studying ways to help its ailing peer.

In an interview with Reuters in Chicago, United Chief Executive Glenn Tilton said it was possible that Lufthansa, its partner in the airline network Star Alliance, would take an equity stake in United.

A Lufthansa spokesman had told reporters earlier at the Frankfurt airport that suggestions it would take a stake were speculation.

Lufthansa later declined to comment on Tilton's remarks, saying simply that Lufthansa was still considering its options to support the bankrupt carrier.

United Airlines, the world's second-largest airline and a unit of UAL Corp, became the biggest air carrier ever to seek court protection on Monday when it filed for Chapter 11 bankruptcy. Lufthansa has said it is in talks with United to find ways to help it out of its crisis.

Lufthansa Chief Executive Juergen Weber said in a statement he believed United would be able to restructure successfully under Chapter 11.

Cash Rich

"This is why we are currently investigating how we — in addition to commercial measures already initiated — can assist United Airlines financially without any risk to Lufthansa," he said.

Lufthansa shares were down 3.3 percent at 10.25 euros by 1726 GMT, roughly in-line with the blue-chip DAX, which fell 3.23 percent.

Lufthansa is cash rich and has largely bounced back from the aviation crisis sparked by the September 11 hijack attacks in the United States in 2001.

By September of this year the German airline had cash flow of 1.87 billion euros ($1.88 billion). It has said it expects to make an operating profit of 700-750 million euros in 2002.

In 2001 the group made 28 million euros in operating profit, down from over a billion the year before as the weak economy, pilot strikes and hijack attacks knocked air travel.

Analysts say the purchase of a stake is unlikely but not ruled out. They expect Lufthansa to offer United a loan of between $100 million and $200 million as long as it is secured.

Clients Not Affected

Meanwhile Lufthansa said its customers would not see any effects from United's woes and would still be able to collect air miles and use airport lounges.

United will continue to fly under bankruptcy protection, which Lufthansa said meant that 330 code-share flights continued to be at their clients' disposal. Code sharing allows airlines to sell tickets on each other's planes.

"All potential risks for Lufthansa have been evaluated and found to be small and manageable," the German airline said.

Lufthansa shares fell over seven percent in the past week on worries about the future of the Star Alliance network if the U.S. carrier were to go under.

The five-year-old Star Alliance is the world's largest airline network, with 14 carriers covering more than 700 destinations.

The Star Alliance said in a statement United's Chapter 11 filing would have no impact on its alliance membership.

United said it hoped to complete the bankruptcy case within 18 months and stressed that customers would see "business as usual" during this period.