DHL, a unit German mail carrier Deutsche Post, launched a review of its operations earlier this year covering a shake-up of its complexes in Brussels and Bonn.

The company said Thursday it had scrapped plans to expand operations in Brussels with the loss of up to 1,700 jobs, after Belgian politicians failed to resolve a row over night flights.

With Brussels no longer in the running, the two most likely locations for DHL's international hub are Vatry and Leipzig. "We'll be making our decision in the next two to three weeks," said DHL Express chief for Europe Peter Kruse.

"Leipzig can provide 24-service," he added, and pointed out that the availability of qualified employees and generous State support -- based on the €70.8 million ($90 million) the EU recently earmarked for Leipzig -- made the city an attractive option.

The move would create several thousand new jobs and help secure existing positions at the Leipzig airport.

Threatened government

The Brussels plans stalled on Belgian demands for tighter limits on the number of night flights out of Zaventem, Brussels airport. Months of negotiations between federal and regional governments at one stage even threatened to topple the government.

"DHL regrets that despite intensive involvement of the (Belgian) government and major efforts by DHL, no official nor adequate proposal has been sent to the company's management," said DHL in a statement.

"This will prevent DHL from implementing its long-term expansion plan at Brussels National Airport and from creating an intercontinental hub," it added in a statement.

Strike action on the cards

According to media reports, DHL workers have decided to launch strike action following the company's decision, made at an extraordinary board meeting.

DHL said it will continue with its current operations until 2008, and then maintain a regional centre in Brussels.

Among the measures which the courier company had been seeking was a doubling of the number of night flights allowed out of the Belgian capital's airport.

On Tuesday Belgian Prime Minister Guy Verhofstadt urged DHL to consider replacing its noisier McDonnell-Douglas 11 cargo planes with quieter version by 2011 and not 2018 as the company had suggested.

"We feel sorry but understand and respect the position of the involved governments," said Peter Kruse. "We thank Prime Minister Verhofstadt and the other parties for their involvement and continuous efforts to make this considerable investment possible in Brussels."