Air-India is in talks with Lufthansa Technik, a subsidiary of the Lufthansa Group, to form a joint venture with its engineering division. Air-India had decided last year to hive off its engineering, infotech and ground-handling divisions.

A high-level civil aviation ministry delegation was in Frankfurt earlier this month for preliminary talks with Lufthansa.

Air-India is also pitching for a marketing tie-up with the German carrier. Besides code-sharing, the tie-up would explore opportunities for a brand and marketing alliance, ministry sources said.

The sources said Lufthansa would initially undertake an audit of Air-India's existing service levels and operations.

As part of the marketing and commercial alliance, Air-India and Lufthansa may also exchange feeder services in their respective regions.

Air-India's engineering division has been involved in maintenance of airframes, repair and overhaul, and aircraft certification, as well as component repair and overhaul for international and domestic airlines.

The details of the equity structure in the proposed engineering venture will be finalised during the course of the year. Lufthansa Technik has 25 operating companies worldwide, and its five business divisions serve more than 300 customers.

Air-India has also received preliminary enquiries from GlobeGround India, Lufthansa's ground-handling in India, for a joint venture partnership in the national carrier's ground-handling company.

The proposed tie-up with Lufthansa can be seen as Air-India's move to be a part of the Star Alliance, of which Lufthansa is a founding member.

Star Alliance, which has 16 members, is the largest airline coalition in the world.

Air-India is in talks with other members, such as Air Canada and United Airlines, for similar tie-ups.