Frankfurt - Lufthansa, which has announced an earnings setback, is to take controlling stakes in British airline BMI and German airline Eurowings, it said Wednesday in Frankfurt.

Earlier this week, Lufthansa emerged among the last two bidders for Austrian Airlines. Wolfgang Mayrhuber, Lufthansa chief executive, said the German airline could help the Austrian unit increase sales.

High fuel prices earlier this year and a looming recession have put heavy pressure on smaller, weaker airlines in recent weeks, speeding up consolidation in the aviation industry.

Lufthansa already holds minority stakes in both Eurowings and BMI, which was formerly named British Midland.

In Frankfurt, Lufthansa said it had received an offer from another Eurowings shareholder, AK Industriebeteiligung, of 50.9 per cent of the airline and this would be acquired by the end of the year.

Earlier plans to merge Eurowings, which mainly flies routes within Europe, with an airline run by German holidays company TUI failed.

Control of BMI is to be acquired from businessman Michael Bishop, Lufthansa said. The British airline is valuable because of its landing and takeoff slots at Heathrow Airport, the principal London airport.

Lufthansa warned Tuesday that it expects operational earnings this year to total just 1.1 billion euros, down from its past forecast of 1.4 billion euros.

It said it would cut more costs, pare back plans to increase its fleet size and would only increase total available flights next year by 1 per cent. (dpa)