The Dubai-based Emirates is looking at taking over unprofitable neighbour Etihad, Bloomberg News said quoting people familiar with the matter, in a move that would create the world’s biggest carrier by passenger traffic.

 

The talks, which are at a preliminary stage, would see Emirates acquire the main airline business of Abu Dhabi’s Etihad, which would keep its maintenance arm, according to the people, who asked not to be named because the matter is confidential, Bloomberg said. The negotiations could yet fall through, they said.

 

Any deal would require the blessing of the rulers of the two UAE emirates. For Abu Dhabi, which sits on 6 percent of global oil reserves, it would advance a drive to overhaul state-controlled entities as it adapts to lower crude prices. The airlines have traditionally been arch rivals, with their hubs competing to attract the same transfer passengers making long-distance trips between Asia and the West.

 

An Emirates spokeswoman said the company doesn’t comment on speculation, as did a spokesman for Etihad, Bloomberg News said.

 

Were a transaction to go ahead the enlarged airline operation would be bigger than that of American Airlines Group, which has a market value of $19.2 billion.