The management board of German airline Deutsche Lufthansa will discuss this week whether to set up a low-cost, no-frills airline, the company said yesterday. The move would follow the route taken by British Airways which is setting up its own low cost operation Bluesky to counter competition from competitors such as Easijet who have lower overheads.

The German weekly news magazine Der Spiegel said the company would decide tomorrow whether to set up the "Lufthansa Light" airline to try to stem losses on domestic routes running into hundreds of millions of marks.

A Lufthansa spokeswoman confirmed the management board would hold discussions on a lowcost airline, but added that this was the first time it had considered the plans. She would not say whether a decision would be made tomorrow.

According to Der spiegel, the low-cost airline would initially have 14 aircraft and would cover domestic routes which did not pass through Lufthansa's Frankfurt and Munich hubs.

In a second phase, 16 more aircraft would be added which would fly routes in Europe such as Leipzig-Paris.

The mazagine said the aircraft would have more seats than usual, and servicing and repairs would be contracted out to an external company, to keep costs down.

If the plans were approved, the new airline could be launched in October, it added.

Industry analysts say the German domestic market is stagnating and Lufthansa is facing an increasingly fierce battle against carriers like Deutsche BA, the German unit of British Airways Plc, and Eurowings Luftverkerhrs AG.

Some believe the creation of a no-frills carrier could help the company win back market share, but others argue the move could dilute Lufthansa's brand name and reputation.