The European Commission said today it needed more time to study the proposed takeover of Austrian Airlines by the German aviation giant Lufthansa, in a move which could put the project in jeopardy, according to dpa. In a statement, Competition Commissioner Neelie Kroes said the commission had "serious doubts" after initial investigations had indicated that the takeover could result in reduced choices for customers for airline services and lead to higher fares. The Commission said it had decided to open an "in-depth inquiry" which however would not pre-judge the final result of the merger investigation. "The Commission has decided to open an in-depth merger investigation into Lufthansa's takeover of Austrian Airlines because it has serious concerns that the result for passengers could be higher prices or reduced services on certain routes," Kroes said. He said it was "essential" that airline consolidation should not deprive passengers in choice between airlines, competitive prices "and other benefits of liberalisation of air transport in the EU. "I hope that, in a spirit of mutual cooperation, we will be able to work closely with Lufthansa in the coming weeks to find timely solutions to these concerns," Kroes's statement added. The reference to timely solutions comes amid concerns about time running out, after Lufthansa had set a July 31 deadline for the approval of it bid for Austrian. The deal would create Europe's biggest airline group in terms of passenger numbers. In 2008, Austrian Airlines and the Lufthansa group, which includes Swiss, transported a total of 81.3 million passengers. The French-Dutch carrier Air France KLM counted 75.4 million guests in the same period. Plagued by high fuel prices and the economic downturn, Austrian Airlines made a net loss of 429.5 million euros (605 million dollars) in 2008 and ended the year with some 1 billion euros of debts. Austria's state holding agreed last December to sell its 42-per-cent stake in the flag carrier to Lufthansa for 366,000 euros, while the government in Vienna took over half of the debt to sweeten the deal. The Commission statement noted that the EU had previously cleared Luftansa's acquisitions of British Midland and Brussels Airlines, and noted that the German carrier also controls such other airlines as Swiss, Air Dolomit, Eurowings and the low-cost carrier Germanwings. It was also a leading member of the Star Alliance of air companies. "The Commission's initial investigation found that the proposed transaction would lead to competition concerns with respect to inter alia the routes from Vienna to Frankfurt, Munich, Stuttgart, Cologne, Zurich, Geneva and Brussels," the statement said. It noted that Lufthansa had "proposed remedies" but that the Commission found that theme to be insufficient. "The Commission will continue to work closely with Lufthansa to resolve the outstanding issues as quickly as possible," the statement said, while also noting that Brussels was separately mulling state support for Austrian Airlines under EU aid rules.
