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* Lufthansa buys remaining 55 percent of Brussels Airlines
* Will be part of expansion of budget operation
* Lufthansa CEO sees more consolidation (Adds analyst comment, fleet details)
By Victoria Bryan
BERLIN, Dec 15 (Reuters) - A deal to take over BrusselsAirlines will help Lufthansa's Eurowings budgetbusiness to double in size next year, part of the German group'sresponse to fierce competition in the European aviation market.
Lufthansa said on Thursday it was exercising an option tobuy the remaining 55 percent of Brussels Airlines for 2.6million euros ($2.7 million). That adds 51 planes to theLufthansa group and expands its network in Africa, where theBelgian company flies to many sub-Saharan destinations.
A source has previously said that the purchase price wasrelatively low because Lufthansa has loaned 45 million euros toBrussels Airlines.
Low-cost airlines Ryanair and easyJet havegrown rapidly to dominate the European short-haul market overthe last decade, forcing rivals to bring down costs.
In the last year, security concerns, Brexit and fallingticket prices have made life increasingly tough for Europeancarriers.
"I'm convinced we will see a lot more consolidation in yearsto come, the strong ones will get stronger and bigger,"Lufthansa CEO Carsten Spohr told reporters, describingcompetition as fierce.
Spohr said the acquisition of Brussels Airlines meantLufthansa Group, which also includes Swiss International AirLines and Austrian Airlines, would have up to 700 aircraft nextyear, with up to 180 as part of Eurowings.
Lufthansa said Brussels Airlines also had an attractive costbase, having brought its non-fuel unit costs down by almost 10percent over the last three years.
"Only airlines with a competitive cost structure will fitinto our group," Spohr said. The core Lufthansa brand is alsotrying to cut costs and is embroiled in a protracted disputewith its pilots.
Lufthansa Group currently has around 600 aircraft, withanother 40 set to come next year from a lease deal with AirBerlin.
Liberum analyst Gerald Khoo, who has a "Sell" rating onLufthansa cautioned that scale wouldn't automatically deliverlower costs or a better financial performance.
"It is concerning that the Lufthansa Group is chasing scaleand trying to occupy territory in order to make it harder foreasyJet and Ryanair. But at best, that can only be a delayingtactic," he told Reuters.
The deal continues a spate of consolidation seen in themarket recently, with tour operator TUI and Etihadforming a new European leisure airline from TUIFly and Niki. ($1 = 0.9594 euros) (Reporting by Victoria Bryan; Editing by Maria Sheahan andKeith Weir)
