Together, the companies would constitute the world's largest airline in terms of passenger traffic.

The talks are at a preliminary stage, and a deal would need to be approved by the rulers of the United Arab Emirates' richest sheikhdoms.

Etihad would retain maintenance operations, according to the sources – who stress that the deal could still collapse.

For Abu Dhabi, which controls 6 percent of the world's oil reserves, it would represent a step forward in terms of its ambition to reshape state-owned companies to adapt to lower oil prices.

The two airlines have historically been arch-rivals, competing for the same transfer passengers traveling between Asia and the West.

A spokeswoman for Emirates and a spokesman for Etihad tell Bloomberg that they do not comment on speculation.

According to Reuters, however, Etihad denies that Emirates wants to buy the company.

Source: di.se