Abu Dhabi-based Etihad Airways has held talks with BMI British Midland about a possible merger that could value the airline at up to $1.07 billion, the UK's Sunday Times has reported. Etihad has approached both BMI and Lufthansa, the German airline that holds a stake in BMI, about the potential merger. Lufthansa has an option to take complete control of BMI later this year or early next. However, it is understood it wants to sell its stake for around $357m and that talks with Etihad were held in the summer.