Such a merger would be the latest stage in the consolidation of the Russian airline market, which boasts several small airlines.

Most Russian customers fly with the four main airlines, of which Aeroflot and Sibir are two.

The two airlines have agreed to share routes, combine their fleets of aircraft and set up a joint leasing firm.

The deal, which was initiated by the government, is seen by experts as a first step towards an all-out merger between the two airlines.

Changing industry

A merger would make sense for both airlines.

Sibir is considered to be the best run airline in Russia, experts said, while Aeroflot is easily the largest.

Some observers even believe Sibir may overtake the number two carrier in Russia, Pulkovo, following a planned merger with the airline Vnukovo.

When these merger plans were announced in January, industry analysts described it as "the biggest landmark in Russian aviation history since the breakup of Soviet mammoth Aeroflot into hundreds of smaller airlines in the early 1990s", according to the Moscow Times.

Russian giant

If a merger between Aeroflot and Sibir takes place, it would create a new giant in Russian aviation.

Aeroflot carried five million passengers in 2000, while Sibir carried just over a million.

However, Sibir would in combination with Vnukovo carry about two million passengers, according to Moscow Times.

Both Aeroflot and Sibir expect sharp growth in passenger numbers for 2001.

Aeroflot is expected to be confirmed as the buyer of Sir Richard Branson's low-cost airline, Virgin Express Ireland, in early April.

Buying Virgin would give Aeroflot access to European markets without relying on bilateral agreements with western European carriers.

Consolidation

Aeroflot's chief executive Valery Okulov has previously said that Russia's airline industry is in dire need of consolidation.