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Brussels clears Lufthansa-Austrian takeover deal
Published in Saudi Press Agency on 28 - 08 - 2009


The European Commission on Friday approved
Lufthansa's takeover of Austrian Airlines after the German carrier
agreed to allow competitors to operate between Vienna and Frankfurt,
Munich, Stuttgart, Cologne and Brussels, according to dpa.
The deal aims to create Europe's biggest airline group in terms of
passenger numbers.
European Union regulators had already given a provisional green-
light to the deal in July, but only on condition that Lufthansa take
steps to minimize competition concerns raised by the potential
merger.
An investigation by the EU executive in Brussels had shown that
the merger would have reduced consumers' choice and would have likely
led to higher prices on the following routes: Vienna-Frankfurt,
Vienna-Munich, Vienna-Stuttgart, Vienna-Cologne and Vienna-Brussels.
"Lufthansa submitted commitments which have removed these
competition concerns on all these routes," the commission said in a
statement Friday.
A commission spokesman later explained that Lufthansa had agreed
to offer "good quality slots to existing competitors or new entrants
on the market."
Lufthansa is taking over the Austrian state's 42-per-cent stake in
the national carrier as well as privately-held shares for a maximum
total of 382 million euros (545 million dollars), depending on
Austrian Airline's future business performance.
In a related decision, the commission also cleared the Austrian
government's offer to take over 500 million euros of Austrian
Airline's debt, which totalled nearly 2 billion euros at the end of
March, after concluding that the move was compatible with the
European Union's rules on state aid.
"This case shows that consolidation in the airline sector is
possible with proper remedies to safeguard consumers' interests," EU
Competition Commissioner Neelie Kroes said.
In a statement issued by its corporate headquarters in Cologne,
Lufthansa said the conditions that had been imposed on the deal by
the commission were "economically acceptable."
Shares in the German carrier jumped 1.1 per cent to 11.26 euros on
the Frankfurt stock exchange on the news.
Lufthansa is the largest German airline with hubs at at the
Frankfurt and Munich airports. Lufthansa also controls Swiss, Air
Dolomiti, Eurowings and Germanwings and has recently acquired British
Midland and SN Brussels Airlines.
In 2008, Austrian Airlines and the Lufthansa group transported a
combined 81.3 million passengers. The French-Dutch carrier Air France
KLM counted 75.4 million passengers in the same period.
Top managers from Lufthansa and Austrian planned to hold a press
conference outlining details of the deal on September 3 in Vienna.


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