ExCeL London - 30 Sep - 01 Oct 2021
18 October 2021 - Virtual
28 October - London, UK
Airline meets Austrian state in Vienna
The Austrian government has today (September 3) signed over its holding in Austrian Airlines to Lufthansa in a deal said to be worth €166m to shareholders.
Lufthansa now holds more than 90% of the shares in Austrian after state-owned holding company Österreichische Industrieholding AG (ÖIAG) handed over its stake.
The German airline paid ÖIAG just €366,268 for its 41.6% holding of around 36,628,791 shares, or €0.01 per share.
But as part of the deal Lufthansa will also pay €166m at €4.49 per share for 36,959,414 (41.9%) shares held by private shareholders.
Lufthansa said all the shareholders who had offered their shares for sale by the May deadline would be paid today.
The private and minority shareholders representing the remaining 10% stake not held by Lufthansa have until September 9 to sell their shares.
Lufthansa said it would "carry out all necessary steps to squeeze out the rest of the minority shareholders."
Its share offer for Austrian was approved by 85% of the shareholders, above the 75% threshold needed under the takeover terms.
Lufthansa's Wolfgang Mayrhuber and Stefan Lauer, ÖIAG's Dr Peter Michaelis, and Dr Peter Malanik and Dr Andreas Bierwirth from Austrian were expected to announce formally the deal later today.
The deal comes after Mr Lauer, Lufthansa's chief officer group airlines, said the world's airlines stood to lose more than industry estimates.
Mr Lauer said losses could exceed the $9bn predicted by the International Air Transport Association (IATA) with no improvement seen as yet.
"We cannot expect a miracle from one day to the next," Mr Lauer told reporters.
Mr Lauer said Lufthansa would take "strenuous efforts" to reach its 2009 earnings targets.
Austrian is the latest airline to join the Lufthansa group after Brussels Airlines and bmi earlier this year.
Last week Austrian announced it was to axe ten of its 24 vice presidents as part of a wider restructuring programme.
The airline, which has struggled from falling demand and mounting debt, said it would reduce its management by as much as 45%.
Austrian has in the past admitted cutting costs in the hope that the EC would approve its takeover by Lufthansa.
The future of Austrian is now less in doubt with responsibility for its mounting debts passing to Lufthansa.
In return for the increased debt exposure, the Austrian government has agreed to pay Lufthansa a €500m "capital increase".
But at €4.49 per share, the €366,268 paid for Austrian is far less than the "state aid" given back to Lufthansa.
A probe by the European Commission (EC) last week concluded that the sale of Austrian to Lufthansa was within community law despite the "negative price" paid.
The EC accepted that the €500m government aid was to "compensate for Austrian Airlines' high level of historical debt."
The EC approved the take over but said certain conditions must now be met including a cap on growth and capacity cuts.
Lufthansa must now cut Austrian's capacity by 15% on last year's levels by the end of 2010.
Austrian's growth in capacity is to be capped at Association of European Airlines (AEA) averages until 2015.
The EC also accepted a "debtor warrant" to be given to the Austrian state by Lufthansa which might lead to additional payments.
The EC said last month (August) that competition concerns surrounding Lufthansa's takeover of Austrian had been successfully dealt with.
Lufthansa has offered to give up slots on routes between Vienna and Stuttgart, Cologne, Frankfurt, Brussels and Munich.
Three daily flights to Stuttgart and three to Cologne could be freed up as part of the deal.
Five flights a day to Frankfurt and up to four flights on Munich and Brussels routes may also be given up by Lufthansa.
Austrian budget carrier Niki and Slovenia's Adria Airways have been singled out as being interested in the routes.
www.austrian.com www.lufthansa.com http://ec.europa.eu/index_en.htm