Austrian Airlines shares sank 9.6% yesterday as Lufthansa announced it was to establish a new Milan-based airline. The fascination of Lufthansa for the northern Italy airport and for the valuable Italian market – just as Alitalia relinquishes most of it – can hardly be flattering for the Viennese would-be Lufthansa bride.
Establishment of yet another European hub so close to home would be not be welcome for the Austrian flag – nor, for that matter, for its government.
Another reason for investor skittishness would be potential doubts about Brussels approving the Lufthansa demand that Austria cover the EUR500 million debt that is part of the “sale” to Lufthansa.
With the exception of Austrian, European airlines fared reasonably well against a negative overall exchange loss of around 2% across the region.
European selected airlines daily share price movements (% change): 26-Nov-08