Airlines in merger talks

Thomas Cook is in talks with Lufthansa and TUI Travel for a potential merger of Condor, Germanwings and TUIFly Germany.

The talks follow the collapse of a deal between Thomas Cook's German airline Condor and Air Berlin in July.

The companies blamed falling passenger numbers and higher fuel prices for the failure. German antitrust authorities were also said to be unhappy about the merger.

Although Thomas Cook said at the time it would continue to look at the possibility of a deal with Air Berlin, it also said it would be looking at alternatives for the airline.

High costs and low consumer confidence have created difficult conditions for the airline industry.

Several airlines have already gone bankrupt this year, including Silverjet, Eos and Oasis, while others have reported sharply falling profits.

Analysts have predicted a wave of consolidation in the industry as airlines merge to save costs. British Airways announced plans to merge with Spanish airline Iberia and is currently attempting to strengthen its alliance with American Airlines.