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European Commission approves Lufthansa takeover of Austrian Airlines

31-Aug-2009 9:43 AM

European Commission (EC) approved (28-Aug-2009) both the merger of Austrian Airlines and Lufthansa and granted anti-trust immunity for the carrier to be part of the Lufthansa Group as of Sep-2009 and approved the restructuring aid of EUR500 million by the Austrian Goverment. Shareholders of Austrian Airlines have offered a total of over 75% of the necessary shares of Austrian Airlines for sale, meeting all Lufthansas'' preconditions from the merger. The merger will be closed within the next 10 stock exchange trading days, after which Austrian Airlines becomes a member of Europe’s largest airline alliance. [more- Austrian Airlines] [more- Lufthansa]

The merger is conditional upon the implementation of a set of remedies offered by Lufthansa to remove the Commission's competition concerns. Lufthansa has submitted commitments which have removed the competition concerns on the five routes of concern to the EC. Other restrictions on the merger include a reduction in capacity by Austrian Airlines of 15% from its Jan-2008 level by the end of 2010. Thereafter Austrian Airlines' growth will be capped at the average of the growth rate observed for member airlines of the Association of European Airlines. Such cap will remain in place until end 2015 or until Austrian Airlines reaches an operational break even, whichever comes first. Austrian Airlines will also reduce its shareholding in Schedule Coordination Austria to 25%. [more- Transport Commission] [more- Competition Commission]

Austrian Airlines: “In Lufthansa, we have found an excellent partner for Austrian Airlines, which will enable us to offer our customers an even larger and more attractive route network in future. The economic basis of Austrian Airlines improves enormously as a member of the Lufthansa Group... The Lufthansa Group has enormous thrust. But it will be up to us to throw the lever to ensure we can transform that thrust into the speed and altitude we are going to require...Our goal is to use our competence in Central and Eastern Europe, and to establish Austrian Airlines and its Vienna base as a high-performance hub for the Lufthansa Group, carrying traffic throughout Eastern Europe,” Peter Malanik & Andreas Bierwirt. Executive Board members. Source: Austrian Airlines, 28-Aug-2009.

European Transport Commission: "This decision is yet another step taken favouring the consolidation of the airline sector. It will lead to a market that is undistorted by state aid, with an ultimate benefit for passengers." European Transport Commission VP & Commissioner for Transport, Antonio Tajani. Source: European Commission, 28-Aug-2009.

European Competition Commission: “This case shows that consolidation in the airline sector is possible with proper remedies to safeguard consumers' interests,” Competition Commissioner, Neelie Kroes. Source: Competition Commission, 28-Aug-2009.