Switzerland's SAirGroup, currently undergoing a massive shake-up, has abandoned plans to merge its three French subsidiary airlines, AOM, Air Liberté and Air Littoral. The group is to continue working with the Polish airline, LOT.
The news follows the resignation of the head of the French subsidiary group, Paul Reutlinger, at the weekend.
Progress in merging the French units, which were to rival Air France in the French market, was slower than expected, partly due to the resistance of French unions to planned job cuts.
SAirGroup also recently called a halt to all new investments and acquisitions, following mounting losses among its partner airlines.
A spokesman for the French national pilots union (SNPL), who met Reutlinger on Monday, said that in future "AOM will fly under the name of Air Liberté, while Air Littoral will remain independent".
"The ties with Air Littoral have been cut," said the spokesman. "The future of Air Littoral, if there is one, is independent but also disconcerting."
The union spokesman added that SAirGroup intends to look for a new shareholder.
The French carriers also announced Monday that plans to lease eight Airbus A319 jets had been cancelled, saying their parent had withdrawn money for the planes.
"We signed a leasing contract with an airline for the planes, but our shareholder is no longer ready to make the investment," a spokeswoman for the carriers told Reuters news agency.
While the outlook between SAirGroup and its French subsidiaries is less than sunny, the group has confirmed that it plans to continue its partnership with Poland's LOT Air. SAirGroup holds a 37.6 per cent stake in the Polish carrier.
LOT is also set to stay a member of the Qualiflyer alliance, which has so far included the three French subsidiaries, as well as SAirGroup's Swissair and Crossair, the Belgian airline, Sabena, Turkish Airlines, Italy's Air Europe and Volare, and Portugal's TAP Air and Portugalia.
However, SAirGroup has made it clear that it is looking at a number of alternatives to its existing Qualiflyer alliance group.
SAirGroup announced a change of strategy two weeks ago, following the departure of its chief executive, Philippe Bruggisser.
Under Bruggisser, the company had been trying to improve its market position with a series of alliances with other airlines and by acquiring stakes in other carriers.
Last week, the group cancelled plans to invest in Portugal's TAP Air and Turkish Airlines, although they have reaffirmed their commitment to South African Airways.
On Monday, British Airways revealed that it was in talks with Swissair over the possibility of the Swiss carrier joining its "oneworld" alliance.
Speaking in London on Monday, British Airways chief executive, Rod Eddington, confirmed that talks were underway with Swissair but said it was too early to tell whether the Swiss carrier might join the alliance.
"We can rule nothing in, and nothing out," he told reporters at a press conference.
The "oneworld" alliance involves some of the biggest players in the airline market including British Airways, American Airlines, Iberia, Qantas, and Cathay Pacific.
Swissair's parent company, SAirGroup, refused to comment on the talks.
News on the SAirGroup's review of operations is expected in March.
swissinfo with agencies