ATW Daily News

Lufthansa eyes stake as Austrian scrambles following investor pullout

Wednesday May 7, 2008

Lufthansa is considering taking a stake in Austrian Airlines Group, a source close to the German carrier told ATWOnline, saying, "We are watching the value of Austrian's shares very closely, especially with the shareholders meeting scheduled for [today] in Vienna."

In addition, Financial Times Deutschland reported yesterday that LH is awaiting "signs from Vienna" regarding the possibility of purchasing shares but denied that there are any concrete negotiations. However, ATWOnline's source said there already have been discussions between LH and AAG management.

AAG CEO Alfred Oetsch is under enormous pressure to come up with new options for the financially troubled carrier, especially now that Saudi-Austrian investor Mohamed bin Iassa Al-Jaber is looking to pull out of his deal to acquire 20% (ATWOnline, May 6). Yesterday, Oetsch released a statement saying that "the reasons given" for Al-Jaber's attempted exit "are not comprehensible for us in any way" and that "we expect. . .Al-Jaber to comply with the contract. If this should not take place, we shall undertake appropriate steps in order to preserve our rights."

Al-Jaber and his representatives apparently accused AAG of "deception," which Oetsch claimed "is astonishing, as the investor still intended to increase his commitment by a further 4.9%, taking advantage of the low share price, in the knowledge of the already disclosed results of the first quarter of 2008." AAG suffered a €60.4 million ($93.4 million) first-quarter loss.

Oetsch said the airline's strategy and focus on growth in Central and Eastern Europe and the Middle East "is neutral to questions of ownership" and will not change. FTD reported that LH considers Austrian's Eastern European network to be one of the latter's most attractive assets.

by Kurt Hofmann and Brian Straus

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