EC greenlights Lufthansa takeover
August 28, 2009
The European Commission announced its decision on Friday after Lufthansa agreed to give up 19 take-off and landing slots on connections between Vienna and various German cities.
Lufthansa will buy 41.6 percent of AUA for a nominal sum of one euro cent per share, totaling 366,000 euros ($518,000). This will raise Lufthansa's stake in the loss-making company to 75 percent. The Austrian government promised to absorb 500 million euros, or one third, of AUA's massive debts in order to facilitate the merger.
The EU Commission delayed the deal between the two airlines, which was signed last year, over concerns that it would give Lufthansa too much control over flights between Germany and Austria and could result in higher prices for consumers.
European Competition Commissioner Neelie Kroes said of Friday's decision, "It shows that deals between airlines are possible when certain conditions are met to protect the interests of consumers."
Following a preliminary announcement made by the EC in late July, AUA promised to drastically slash the size of its management staff in order to reduce costs.
The EC has relaxed its monopoly rules in recent months to aid the rescue of companies affected by the global financial crisis.
Author: Ben Knight
Editor: Rick Demarest