EU Concern Over Lufthansa/Austrian Deal

Feb 11, 2009
Jens Flottau/Frankfurt jflottau@freenet.de



The European Commission today expressed doubts about the proposed takeover of Austrian Airlines by its partner Lufthansa.

The Commission stated it has doubts "whether this state aid (as part of the deal) can be declared compatible with the common market" and "whether the price paid reflects the market price for Austrian Airlines at the time it was sold." The Commission also questions whether "the sale was truly open, transparent and unconditional." Air France-KLM and Ryanair have filed complaints. claiming that it was not.

The investigation could significantly slow the process. But Austrian Airlines is under enormous time pressure to close the deal, as it currently survives only on a bridge loan that will not last much longer.

Originally, Lufthansa and Austrian hoped to close the deal in April, but that seems unrealistic now. Austrian's Chairman Peter Michaelis stated last week that bankruptcy could become a real possibility if the EU approval is not granted.

Following the state aid investigation, the Commission would enter into an analysis of effects on competition and may ask for significant concessions, as shown in similar cases such as the proposed Lufthansa/Brussels Airlines combination.

Austria's state holding OEIAG said that it is still convinced the takeover will eventually be approved.

Photo: Austrian Airlines