Further concessions must be made - EC
A decision on Lufthansa's takeover of Austrian Airlines could still be reached this month if further concessions are made, the European Commission (EC) said today (July 13).
The EC said the quick July decision the German carrier wants could still be reached if it agreed to regulatory conditions.
An EC spokesperson told ABTN that Lufthansa had still not offered a satisfactory deal.
"We haven't given them a deadline. The quicker they come up with the remedies, the quicker we can get a decision on this case.
"But we've had no indications since Friday that they're going to submit anything new," the Commission said.
"Lufthansa has always said they want a quick decision, and we're willing to make a quick decision but we need the remedies on the table that allay the competition concerns.
"Until they come up with them, then we can't go forward."
Lufthansa told ABTN it had submitted an "informal" package last week that met around 90% of the EC's demands.
A Lufthansa spokesperson said the airline had considered concessions on airport slots but could not confirm further details.
Lufthansa said it had no plans to make any more concessions.
"We have clearly said that we have done whatever we can to make the deal happen," Lufthansa said.
The July window for approval looked under threat of closing completely on Friday as the EC called for Lufthansa to come back with "concrete concessions".
But the EC said a deadline for a July deal had not been set, keeping Lufthansa's hopes of a speedy acquisition alive.
Unless Lufthansa improves the offer, a decision on the EC's probe into the deal may not be made until early November.
"We have received an informal offer. Unfortunately, this was worse than what was previously on the table," EC spokesperson Jonathan Todd said on Friday.
Mr Todd said he regretted that Lufthansa had taken "one step forward and two back" with its latest package.
The EC this month began a second investigation into the takeover, citing concerns that competition could be reduced on routes between Vienna other European cities.
The EC last week said that if Lufthansa came up with "satisfactory remedies (to concerns over competition on several routes) within the next few days," the merger could go ahead.
Mr Todd at the time said that if no acceptable plans were put forward by the German carrier, the investigation would not report until November 6.
Under the terms of the proposed takeover, Lufthansa can walk away if the deal is not signed by July 31.
Austrian Airlines recently announced it was cutting around 1,000 jobs by mid-2010 to help make savings of €200m by 2012.
Austrian admitted that cuts had been made this year in the hope that the EC would approve its merger with Lufthansa.
Under the proposed deal Lufthansa agreed to pay the Austrian government €366,268 for its 41.6% stake in its national airline.
The second part of the agreement was that the Austrian state received a "debtor warrant" from Lufthansa which might lead to additional payments.
The last element was that the Austrian government paid Lufthansa €500m for a "capital increase" in Austrian Airlines.
Lufthansa's share offer for Austrian was approved last month by 85% of the shareholders, above the 75% threshold needed under the takeover terms.
The Commission said it was still considering "state support for Austrian Airlines in the framework of a separate investigation under EC Treaty state aid rules."
The EC said its initial investigation, which started in February, "indicated that the proposed acquisition could, on certain routes, give rise to reduced choice of airline services for passengers and the likelihood of higher fares."
It added: "There are therefore serious doubts as to the proposed takeover's compatibility with the Single Market in the absence of appropriate remedies."
Neelie Kroes, the EC's competition commissioner, said: "It is essential that airline consolidation does not deprive consumers of a choice of airlines, competitive prices and other benefits of liberalisation of air transport in the EU.
"I hope that, in a spirit of mutual cooperation, we will be able to work closely with Lufthansa in the coming weeks to find timely solutions to these concerns."
Lufthansa said the decision to extend the probe was "surprising" but both it and Austrian said they were confident the deal would go through.
www.austrian.com www.lufthansa.com http://ec.europa.eu/index_en.htm