Lufthansa Continues European Consolidation

German flag carrier Lufthansa is acquiring a 41.56% stake in Austrian Airlines from the country’s state holding company Österreichische Industrieholding AG (ÖIAG) and plans to submit a full takeover offer in 2009. It has initially agreed a €366,269 deal to acquire the ÖIAG shareholding but has also placed a debtor warrant of up to €162 million, which will be based on the economic development of the Austrian airline and the growth of its own share price over the next three years. Lufthansa confirmed that a proposed offer of €4.44 per share – the average share price for the past six months – to the remaining shareholders will be launched in the spring, subject to the completion of some undisclosed conditions. This equates to around a €215 million investment.
Lufthansa will also receive a €500 million payment from the Republic of Austria to help the restructuring process and to compensate for the negative shareholder value of Austrian Airlines. This part of the deal remains subject to approval from the European Commission.
Lufthansa already holds full control of Swiss International Air Lines and recently agreed to acquire a minority stake in Belgian carrier Brussels Airlines. Like the other partners, Austrian Airlines will retain its own identity and will operate as a standalone entity within the Lufthansa Group.
“Europe needs a strong aviation sector. Only by combining our powers can we hope to find an answer to the global challenges currently facing our industry,” said Wolfgang Mayrhuber, the Chairman of the Executive Board and CEO of Lufthansa. “For the European economy and Europeans as a whole, it is vitally important that we create an airline alliance consisting of profitably operating airlines. This is the only way we can hope to provide an infrastructure that meets the demands of customers.”