LH would definitely be willing to spend money on LX. Just taking their market, killing long-haul and hubbbing some pax through basel and zurich for argument sake would be a very good move for LH. It would raise yield of tickets in that region and stengthen both FRA and MUN.
LH would have no serious competition to its south anymore.
Since similar stories are going around about SK, competition will be reduced to BA, AF and KL (also not doing too well).

Question is; How long is it going to take?