ATW Daily News

Austrian fears potential postponement of Lufthansa takeover

Wednesday July 1, 2009

Austrian Minister of Finance Josef Proell said this week that "the situation facing Austrian Airlines Group is too serious to delay a decision from the EU regarding the takeover by Lufthansa," Der Standard reported as speculation increased that the EU may postpone its ruling.

Proell was speaking in response to reports that the EU may not make a decision by Lufthansa's July 1 deadline and may spend up to an additional 90 days investigating the merger and the €500 million ($702.3 million) in aid promised by the Austrian government. LH has said it may walk away from the deal either if the EU's conditions were too onerous or if there was no approval by July 1 (ATWOnline, June 12).

If the deal falls through, analysts say AAG will need a significant cash injection in order to survive and will have to cut its fleet by as much as half if it is to operate alone (ATWOnline, June 29).

Current AAG majority shareholder OIAG said a restructuring in Lufthansa's absence would include a reduction of 1,420 jobs and would require an additional €840 million in cash. The cost of insolvency would be around €622 million, Austrian media reported yesterday.

by Kurt Hofmann

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