Airline requests new deadline
Lufthansa has made further concessions on its takeover of Austrian Airlines in an attempt to allay competition concerns.
The German carrier has also asked the Austrian takeover authority to extend its July 31 deadline to August 31.
Under the current terms of the agreement, Lufthansa can walk away from the deal by July 31 at the latest.
But Lufthansa confirmed it is seeking more time to secure approval from the European Commission (EC) by making "adapted" concessions on routes in and out of Vienna.
The EC is currently investigating the proposed deal and has said it could make a quick decision if Lufthansa makes acceptable concessions on routes where there are concerns over competition.
A Lufthansa spokesperson told ABTN the airline was confident of reaching an agreement with the EC.
Lufthansa said a new deadline had been requested because of "indications" the Commission would approve the deal before the end of August.
A spokesperson for the Austrian Takeover Commission said no decision to extend the July deadline had been taken.
Austrian regulators could decide to extend the deadline by days or weeks rather than the full month.
The EC said in a statement today (July 28) that it had received a new offer from Lufthansa after intensive discussions over the weekend.
EC regulators will now run a third consultation with other airlines on whether the proposed new deal is bad for competition in the European market.
Lufthansa's previous package of concessions, submitted earlier this month, was quickly rejected by the EC.
Its regulators, citing competition concerns on routes out of Vienna, said a decision could not be reached by July unless further concessions were made.
If Lufthansa's latest offer is rejected, a decision on the EC's probe into the deal may not be made until November 6.
Lufthansa has indicated that it could walk away from the deal if concessions made the takeover "uneconomical".
But Lufthansa told ABTN it did not want to walk away from talks if EC regulators fail to reach a "quick" decision by the end of July.
Austrian Airlines has warned that it would need a €1bn cash boost should the deal with Lufthansa fall through, twice the €500m grant promised by the Austrian Government.
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.
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.
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."
www.austrian.com www.lufthansa.com http://ec.europa.eu/index_en.htm