EU Commission reaches agreement with Lufthansa

- Important remaining condition for takeover of Austrian Airlines by Lufthansa fulfilled - With the takeover Austrian Airlines will become a member of largest airline in Europe The EU Commission today announced that it has reached an agreement with Deutsche Lufthansa AG on the takeover of Austrian Airlines Group. This means an important remaining obstacle to the successful conclusion of the future partnership has been overcome. At the same time we have received clear signals that a positive decision is forthcoming in the financial aid proceeding. It is therefore highly probable that the takeover will be formally confirmed in August 2009 and that the deal will be successfully concluded probably still in August, but latest in September. The Austrian Airlines Group will then be a member of the Lufthansa Group, and therefore part of the largest airline group in Europe. Andreas Bierwirth and Peter Malanik, members of the Austrian executive board, said the following: "This is good news for our company. We have worked hard to make this privatisation happen, and are happy the way is now clear for it to go ahead. In Lufthansa, we have found an excellent partner for Austrian Airlines." As a member of the Lufthansa Group, the economic basis of Austrian Airlines improves in the long term. This is the case both of revenues and of costs: on the revenues side, the situation of Austrian Airlines improve due to the fact that it will gain access to the international route and sales network of the Lufthansa Group. Austrian Airlines currently operate a network of 120 destinations. The Lufthansa Group, on the other hand, maintains a network of 242 destinations worldwide. Cooperation in the alliance will significantly strengthen the sales strength of Austrian Airlines. There are also considerable beneficial effects on the costs side. This ranges from economies of scale in purchasing through to cost reductions due to joint development of systems and maintenance of aircraft. "Austrian Airlines will benefit from membership of the strong Lufthansa alliance. We will also make a significant contribution to this alliance, however - including our outstanding network in Central and Eastern Europe, the know-how we have in this region, and the unrivalled competence of our staff." Joining the Lufthansa Group will enable Austrian Airlines to restructure itself and significantly improve its level of competitiveness. "Lufthansa is a huge opportunity for us," said the Austrian Management. "But it is not an excuse to simply sit back on our laurels. The Lufthansa Group has a huge amount of power. This power will be a huge help to us, particularly once markets have normalised again. But it will be up to us, and us alone, to pull the right levers to ensure we can transform that power into the required speed and altitude. We will need to do our homework. We need to steadily implement the packages of measures that we have already launched to increase our profitability. If we can do that, we will be successful."
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Source: Austrian Airlines
Date: Aug 3, 2009