Decision must not be delayed - Proell
Fears were growing today (July 1) that any delay by the EC in approving the takeover of Austrian Airlines by Lufthansa may scupper the deal.
The EC is due to rule today on the merger of the two airlines but the EU transport commissioner Antonio Tajani said a decision on other aspects of the proposed deal would not be made for a few weeks.
The Austrian finance minister Josef Proell was quoted today in an Austrian newspaper as saying the situation facing the airline was "too serious to delay a decision from the EU."
Lufthansa has also said it might walk away from the deal if it were not all settled by today.
Earlier this week Austrian executive board member Peter Malanik said the original merger plan may not be enough in the current economic downturn.
He said talks with trade unions over possible lay-offs are being held, but could not say when and how many cuts would be made.
Austrian has been cutting costs since the beginning of the year to ensure the takeover by the German carrier went ahead.
"Certain economies made by Austrian Airlines are absolutely to do with the Lufthansa deal," a spokesperson for Austrian told ABTN this week.
Austrian announced a €225m cost cutting plan earlier this year to include capacity cuts, short-time working for staff and the suspension of pension fund contributions.
There were also reports that the EC plans to look more closely at the deal.
Lufthansa's share offer for Austrian was approved last month by 85% of the shareholders, above the 75% threshold needed under the takeover terms.
The EC launched its investigation into the take over in February citing three elements of the deal with which it was unhappy.
In the first part of the deal, Lufthansa agreed to pay the Austrian government €366,268 for its 41.6% stake.
The second part of the agreement was that the Austrian state received a "debtor warrant" from Lufthansa which might lead to additional payments.
The last element was that the Austrian government paid Lufthansa €500m for a "capital increase" in Austrian Airlines.
As well as concerns over the price, the EC said it also doubted "whether the sale was truly open, transparent and unconditional and whether the State really acted as a market economy investor."
The EC added that it also doubted whether the amount of aid had been "kept to a minimum" and whether the re-structuring plan would restore Austrian to long term viability as quickly as possible.
www.austrian.com [1] www.lufthansa.com [2] http://ec.europa.eu/index_en.htm [3]