Lufthansa's Austrian Buy Hits EU Snag - Report

The European Union is asking Lufthansa to give up more flights to competitors in its investigation of Lufthansa's planned purchase of Austrian Airlines, an Austrian newspaper reported.

Daily Kurier said on Thursday that Brussels, investigating the deal's competition impact and the legitimacy of the state aid it involves until at least July 1, is asking for more because of Lufthansa's parallel takeover of Brussels Airlines.

"The Commission is meanwhile holding the view that it is not enough to give competitors additional slots," Kurier reported without identifying the source for the information.

"Lufthansa's market power... will be so strong that competitors will only have a chance if Lufthansa gives up frequencies," the newspaper said.

Austrian Chancellor Werner Faymann said in an interview with the same newspaper that discussions in Brussels were "fierce", and that he would take the issue up with the Commission, the EU's executive body, during a summit in Brussels on Thursday.

The paper also cited problems with landing rights in countries outside the EU, some of which, including Russia, are questioning whether Austrian Airlines (AUA) can still be considered an Austrian carrier after the takeover.

Airline landing rights are often agreed in bilateral deals between countries and based on the airlines' nationality. Lufthansa and AUA have set up a complex ownership structure for AUA to ensure that it will remain Austrian-owned.