European airline mergers, long expected, are now taking wing.

Air France-KLM in January bought a 25-percent stake in Alitalia after a failed attempt at buying the entire carrier last year. The airline fought it out with Lufthansa, which lost the battle but didn’t sit around moping. It quickly launched Lufthansa Italia, which took its maiden flight a few days ago.

Ryanair, Europe’s largest discount airline, has withdrawn its bid for Aer Lingus after the irish government rejected the $1 billion deal. Ryanair is now expected to look for alternative targets.

British Airways remains in merger talks with Spain’s Iberia. Those talks have become complicated by the pound’s recent slide against the euro, making Iberia’s market capitalization now higher than BA’s.

It’s not just European airlines engaging in merger talks. Australia’s native carrier — Qantas Airways — is looking at merger opportunities in Asia.

The question now is - when will U.S. airline merger talks take off again?  The Delta-Northwest merger last year led to a slew of other merger talks that yeilded no deals. But competing with the giant has become even more difficult as airlines struggle with a travel slump caused by a weak economy. And it’s not just leisure travelers that are pulling back: corporate travel, the main backbone for profits, is on a decline as well.

Last year, U.S. airlines were raising prices. This year, they are cutting prices to lure more travelers. With overcapacity and lower prices, U.S. airlines could probably sit up straight, tighten their seatbelts and brace themselves for another round of talks.

What a difference two years makes. After being foiled by EU regulators in 2006, Ryanair CEO Michael O’Leary is back with another bid for Aer Lingus, but in the midst of an economic slowdown he has cut the offer price in half, to 750 million pounds ($970 million).

The sharply reduced price is unlikely to endear Ryanair to Aer Lingus management, trade unions or the Irish government. But amid broader consolidation trends in the industry, analysts give the low-cost upstart a slightly better chance of success with EU regulators this time around.

More deals of the day:

** Irish banks will move in the coming weeks to facilitate investments of up to 10 billion euros ($12.94 billion) in fresh capital from government, private equity and other sources, the Irish Examiner reported.

** American International Group Inc said it has agreed to sell its wealth management provider AIG Private Bank to Abu Dhabi-listed investment company Aabar Investments Co .

** Kuwait wants to reduce the value of a proposed $19 billion petrochemicals joint venture with U.S. firm Dow Chemical to $16 billion, a Kuwaiti newspaper said.

** Spanish builder Sacyr Vallehermoso has sold its Itinere highway business to Citigroup for 7.9 billion euros ($10.20 billion), cutting its massive debt pile by a third during a housing slump.

** Insurance Australia Group Ltd, Australia’s top car and home insurer, is increasing its interest in Malaysian general insurance venture AmAssurance to 49 percent from 30 percent.

** Norwegian oilfield services company Petrojack has offered to merge its Petroprod unit with Norwegian oil company Det norske oljeselskap in an all-stock deal.

** Dutch telecoms group KPN said it would sell its Getronics unit’s Business Solutions activities for local governments and healthcare in the Netherlands to Total Specific Solutions.

** Electricity Generating PCL (EGCO), Thailand’s second-largest private power firm, said it had indirectly bought a 23.4 percent stake in a coal-fired power plant in the Philippines, its fourth in the country.

** British defence and aerospace company Ultra Electronics Holdings Plc said acquired Dascam Consulting, a United Arab Emirates-based consultancy, for $19 million.

** Loss-making chipmaker Qimonda delayed the release of its fourth-quarter results because it was in talks with several strategic and financial investors on potential partnerships it needs to keep operating, it said.

** Shares in Indonesia biggest coal miner, PT Bumi Resources Tbk, tumbled nearly 7 percent, surrendering early gains, on investor uncertainty over Bumi’s ownership and its group debt.

** Media mogul Sumner Redstone has sold his controlling stake in video game company Midway Games Inc to a private investor to ease his debt load, the Wall Street Journal said.

** Shares in Australian iron ore miner Fortescue Metals Group soared as much as 42 percent, forcing Fortescue to issue a statement that failed to extinguish rumours of takeover interest in the firm.

** Struggling Citigroup Inc plans to sell NikkoCiti Trust and Banking Corp, its trust bank unit in Japan, as part of its global restructuring efforts in a deal that could raise up to 40 billion yen ($420 million), Japanese media reported on Sunday.

** Struggling British furniture retailer Land of Leather said it had received approaches which could lead to an offer for the business.

** A deal to sell Lehman Brothers Holding’s <LEHMQ.PK> prized Neuberger asset management arm to two private equity firms could be challenged if any rival bidders emerge