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Old July 2nd, 2009, 04:55 AM   #201
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How Lufthansa and Austrian Airlines stack up

July 1 (Reuters) - The European Commission was expected on Wednesday to announce an extended review of Deutsche Lufthansa's planned purchase of Austrian Airlines.

Here are some key facts about the two airlines' operations:

LUFTHANSA

Revenue: 24.87 billion euros

Fleet: 545

Employees: 108,123

Destinations: 242 (Lufthansa and Swiss)

Passengers per year: 70.54 million

Freight per year: 1.91 million tonnes

AUSTRIAN AIRLINES

Revenue: 2.46 billion euros

Fleet: 95

Employees: 7,914

Destinations: 130 (Austrian, Lauda Air and Austrian arrows)

Passengers per year: 10.72 million
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Old July 2nd, 2009, 05:29 AM   #202
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I like AuA, great planes, great service, great hot dinner even in 2hrs flights... but a ticket is so expensive... sometimes 100% expensier than other carrier in the same route :S too bad for a nice airline.
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Old July 2nd, 2009, 06:31 PM   #203
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Austrian Airlines to cut 1,000 jobs: company
2 July 2009
Agence France Presse

Austrian Airlines said Thursday it would cut 1,000 jobs following record losses in 2008 and amid a troubled bid by German flag carrier Lufthansa to take over the company.

"Austrian Airlines will begin a series of restructurings aimed at creating a lighter, more efficient structure. This will lead to cuts of around 1,000 jobs between now and mid-2010," the group said in a statement.
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Old July 6th, 2009, 06:54 PM   #204
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Analysts expect 1 bln euro Lufthansa cost cut plan

FRANKFURT, July 6 (Reuters) - German airline Deutsche Lufthansa may slash costs by as much as 1 billion euros ($1.4 billion) when it unveils steps on July 30 to contend with slumping demand, analysts said on Monday.

Lufthansa shares were up 2.6 percent at 8.95 euros by 1420 GMT, bucking a 1.5 percent decline in the blue-chip DAX <.GDAXI> index.

"I have heard from the board level that they will announce cut costs of a very large amount, by up to 1 billion euros," independent airline industry analyst Kurt Hofmann told Reuters.

A spokeswoman for Lufthansa, which has already annouced cuts of 300 million euros, said no further decisions had been taken but it was working on steps that would be made public July 30.

Analysts said a 1 billion euro savings target at Germany's biggest airline was plausible.

"Given that they've already announced cost cuts of 300 million in the passenger business, it is thoroughly realistic that the firm wants to save 1 billion overall," said Equinet analyst Jochen Rothenbacher.

LBBW analyst Per-Olan Hellgren agreed: " Lufthansa said it was cutting capacity because of collapsing demand. It would be possible to cut a billion in costs depending on how much they trimmed capacity."

Metzler bank analyst Juergen Pieper said 1 billion euros seemed high if it was targeted on a single year. "However, a billion spread out over two to three years I could imagine very well," Pieper said.

Hofmann said he expected Lufthansa to move toward shorter working hours in its passenger business, whereas up to now cargo has mainly been affected.

Forced redundancies were unlikely, he said.

"The slump in cargo means that something has got to happen in the logistic area but the red pencil might also be used more in the passenger and maintenance areas," Hoffmann said.

Lufthansa's 300 million euros worth of cost cuts under way include capacity cuts, staff reductions and the phasing out of older airplanes.
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Old July 8th, 2009, 06:57 AM   #205
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Lufthansa cuts Portland-to-Frankfurt service
7 July 2009

PORTLAND, Ore. (AP) - Lufthansa is ending its direct flights between Portland and Frankfurt.

Lufthansa notified the Port of Portland last weekend that it would suspend Frankfurt service after Sept. 12.

A Lufthansa spokesman told The Oregonian the decision was not easy, but the flights have been losing money amid the global recession. The airline will consider restoring the service next year.

Travelers already booked on Lufthansa flights after Sept. 12 will likely be rerouted through Seattle. Alternatives are Delta's Amsterdam route or a five-hour flight to the East Coast followed by a seven-hour trip to Europe.
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Old July 8th, 2009, 09:07 AM   #206
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One time I was in Portland a few years ago and I noticed the LH flight on one of the screens and remember thinking to my self: "daaaamn LH flies non stop all the way out here while we don't even have a direct flight to Europe from SD anymore"

Portland has a nice airport by the way
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Old July 8th, 2009, 11:05 PM   #207
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What a bad news for Portland!
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Old July 9th, 2009, 06:13 PM   #208
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Lufthansa reports 2.8 pct drop in traffic in June
9 July 2009
Agence France Presse

The leading German airline, Lufthansa, said on Thursday it suffered a 2.8-percent fall in traffic in June from the figure for the same month in 2008, owing to the global economic crisis.

Lufthansa transported a total of 4.92 million passengers while its subsidiary Swiss carried 1.12 million, a statement said.

The airline's seat load factor, a key indicator of operations, fell by 3.4 points to 77.6 percent despite reduced overall capacity.

For the first half of the year, Lufthansa said its own passenger numbers fell by 6.1 percent to 26.7 million, but that when Swiss was included the drop was a more modest 4.8 percent to 33.2 million.

"Except for Middle East / Africa, the first half passenger count declined in all traffic regions," the statement said.

Freight operations were also hit by the global slowdown, with Lufthansa Cargo carrying 694,000 tonnes of freight and mail in the first six months of the year, 20.1 percent less than in the same period of 2008.

Lufthansa said in June that it would take more measures to reduce costs, and raised fuel surcharges on most passenger flights as it raised its forecast for fuel expenses this year to 3.55 billion euros (five billion dollars) from 3.4 billion previously.
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Old July 10th, 2009, 01:37 PM   #209
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EU: slim chance of rapid decision on Lufthansa/AUA

BRUSSELS, July 10 (Reuters) - European Union antitrust regulators said on Friday they were unlikely to decide this month on Lufthansa's plan to buy Austrian Airlines (AUA) despite an informal offer of revised remedies from the German carrier.

"Unless there is a miracle, we will not be in a position to take a decision by the end of this month," European Commission spokesman Jonathan Todd told a daily briefing.

Lufthansa has said it can walk away from the planned AUA deal if it does not get the green light by July 31. The EU executive is now reviewing the proposed takeover, with the deadline for a decision set for Nov. 6.
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Old July 11th, 2009, 01:38 AM   #210
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Last A300 departed Lufthansa's fleet
"Rosenheim" completed the final revenue flight as LH3853 FCO-FRA.




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Old July 12th, 2009, 03:09 AM   #211
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Last landing of a LH A300 in FRA - The end of an era
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Old July 13th, 2009, 08:34 PM   #212
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Lufthansa-AUA Deal Further From Gaining EU Approval
13 July 2009

VIENNA (Dow Jones)--Deutsche Lufthansa AG's (LHA.XE) planned takeover of Austrian Airlines AG (AUA.VI) looked less likely Monday after both the European Commission and Lufthansa signalled unwillingness to compromise in the battle for antitrust approval.

Lufthansa's EUR4.49 a share offer for its financially troubled Austrian peer depends on gaining antitrust clearance from the European Commission by July 31.

But Lufthansa Monday said it has no intention of improving the offer it has submitted to the commission, which was rejected for being insufficient.

"We have submitted our offer on Friday," Lufthansa spokeswoman Stefanie Stotz said, declining to elaborate further on the carrier's position.

"We stand by our takeover offer for Austrian Air under the well known conditions," she said.

Meanwhile, Jonathan Todd, spokesman for Competition Commissioner Neelie Kroes, said the offered remedies won't be enough for a clearance, and the ball is now in Lufthansa's court.

"The chances of a decision [by July 31] by the commission are fading very fast," he told journalists in Brussels Monday.

"Lufthansa has given no indication whatsoever that they have any intention of offering improved remedies," he said, underlining that the offer on the table is far from the commission's requirements.

The offered remedies "do not pass what is required for phase two clearance. They are clearly not sufficient to meet our competition concerns," he said.
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Old July 15th, 2009, 07:21 PM   #213
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SCENARIOS-What next for Austrian Air if Lufthansa bid fails?

VIENNA, July 15 (Reuters) - German airline Lufthansa's planned purchase of Austrian Airlines (AUA) could collapse if Lufthansa and the European Commission do not come to an agreement soon in their protracted war of nerves over the deal.

The Commission fears the merger will hamper competition and raise airfares.

Following are some of the options AUA's shareholders and creditors and rivals face if Lufthansa pulls out of the deal, which it can do if it does not have an EU nod by July 31.

Any scenario -- restructuring, bad asset spin-off or insolvency -- would result in a much smaller AUA, and taxpayers would foot an even higher bill than the 500 million euros ($702 million) in state aid that are part of the Lufthansa deal.

* LUFTHANSA LIFTS JULY 31 DEADLINE

Lufthansa can lift the July 31 deadline. This would mean that the deal would close immediately and Lufthansa would bear the regulatory risk -- it could not pull out if the EU insisted on tough conditions.

Lufthansa can also ask Austria's takeover commission -- a body tasked with ensuring shareholders are treated fairly in takeovers -- to extend the deadline. It would have to notify the takeover commission by July 27.

However, the takeover commission said it is not likely to approve a blanket extension for more talks, but would only grant a very limited grace period if Lufthansa could convince it that a brief extension would make the deal possible.

* AUA SALE IS RESTARTED, OPEN FOR NEW BIDDERS

Austrian state holding company OeIAG, which owns 42 percent of AUA, could restart the public tender for its stake. If it did, Lufthansa would be banned from taking part in it for a year, although this period can be shortened on request.

The tender would be a protracted affair: The process in which Lufthansa was picked as winner started in August last year. Lufthansa's main rival in that race had been Air France-KLM .

To survive until then, AUA would need short-term financing, as it will have used up a 200 million euro ($281 million) lifeline loan by the Austrian government by the end of the year.

But that will not be enough. With more than 1 billion euros in debt, another heavy loss due in 2009 and already geared up to more than five times equity, AUA will also need a capital injection -- most likely from the Austrian government.

* AUA DOWNSIZES: PLAN "VIENNA AIRLINES"

AUA's management's 'plan B' is to downsize the carrier by around a third, canceling routes, cutting staff, and mothballing aircraft. It would probably mainly cut long-distance flights and turn the airline into a regional carrier focused on its strengths in eastern Europe and possibly the Middle East.

AUA's chairman and its co-chief executive said on Monday they would need more than 1 billion euros to execute this plan -- more than twice the state aid Austria would provide under the Lufthansa deal.

Sources close to AUA say that they expect the Austrian government to step in with this amount; analysts say that it is hard to see how it could come from anybody else.

For Lufthansa -- and other rivals such as Air Berlin and its Austrian partner Flyniki -- this could create some opportunities to fill in the gaps AUA leaves.

AUA's management also says that such a restructuring would not remove the need to find a buyer for the airline.

* AUA SPLITS IN "GOOD" AND "BAD" AIRLINE: PLAN "ALITALIA"

To remove some of the less attractive aspects of AUA -- such as its debt pile, pension liabilities, redundant employees and aircraft -- the carrier could be split into a "good" and a "bad" part, similar to how Alitalia was broken up last year.

Such a solution would probably ease a sale by putting the burden of dealing with legacy problems onto Austrian taxpayers, who would have to back the "bad" company if the deal is structured the way Italy structured the Alitalia rescue.

* AUA GOES INSOLVENT: PLAN "SWISSAIR"

A sudden and disorderly insolvency like that of Swissair in the aftermath of Sept. 11, 2001, which resulted in a grounding of its fleet and thousands of stranded travellers is an unlikely scenario for AUA, analysts say.

The government and the big Austrian banks which are both AUA shareholders and among its main creditors would be keen on avoiding such a scenario, they say.
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Old July 17th, 2009, 04:50 AM   #214
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Lufthansa submits new AUA remedy offer

BRUSSELS/FRANKFURT, July 16 (Reuters) - Lufthansa has submitted a new remedied offer to the European Commission aimed at tackling antitrust concerns over the carrier's plan to buy Austrian Airlines (AUA) , the German company said.

The commission said late on Thursday it will study the offer carefully but could not make any further comment at this stage.

Difficulties with the proposed takeover this week had raised fears that the deal might not take place, but this new offer gives some hope that a transaction might be possible.

Lufthansa has been fighting to contain concessions in its planned purchase of the Austrian carrier ahead of a July 31 deadline to agree a deal as it struggles to limit the costs of the acquisition

Lufthansa had originally agreed to pay up to 377 million euros ($531.3 million) for AUA and has since had to offer the European Union some concessions on lucrative routes. To offset rising costs of the purchase, AUA on Wednesday approved a 150 million euro savings programme.

AUA lost 429 million euros last year and has piled up more than 1 billion euros in debt, or more than five times its equity. It only survived this spring due to a 200 million euro lifeline from the Austrian government, two thirds of which it has used up.
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Old July 17th, 2009, 09:28 AM   #215
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Lufthansa to make further cost cuts
Published: 2009/07/17
Source: http://www.btimes.com.my/Current_New...21216/Article/

FRANKFURT: Lufthansa announced extra cost cuts yesterday, in part by shedding office staff, to save e1 billion (RM5 billion) per year from 2011.

A letter by Lufthansa’s new chief executive Christoph Franz to staff warned that higher fuel costs and falling passenger numbers posed a real threat and said: “This situation is forcing us to act.”

After posting a first-quarter loss, Lufthansa’s first-half results “will show that this negative trend is continuing”, Franz said.

“We must now make ever more determined efforts to counteract the trend,” he stressed, adding: “We have no other alternative but to resort to painful measures.”

The airline will eliminate about 400 positions by not replacing people who leave the company, and seeks to avoid firings “at present,” Amelie Schwierholz, a Lufthansa spokeswoman said yesterday by phone.

The airline will announce details of the cost-savings programme when it reports earnings on July 30, she added. — Agencies
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Old July 18th, 2009, 09:00 PM   #216
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Lufthansa looks to cut costs by €1bn as demand shrinks
By Kevin Done in London and Gerrit Wiesmann in Frankfurt
17 July 2009
Financial Times

Lufthansa is being forced to cut jobs in its main airline division and to defer deliveries of new aircraft as part of emergency measures to mitigate rising losses.

The German carrier said it was seeking to cut costs by around €1bn ($1.4bn) by the end of 2011 in an effort to reverse the rapid erosion of its competitive position against rival airlines.

Lufthansa has previously been slow to acknowledge publicly the scale of the challenge it faces, but Christoph Franz, the newly appointed chief executive of the main Lufthansa airline division and deputy group chief executive, warned yesterday that the airline industry was suffering "the worst crisis in its history."

In a tough letter to airline division staff he said the "exceptional" decline in demand and passenger numbers was being exacerbated by an "alarming" drop in yields (average fares). The airline was "not earning enough to cover costs" and would report later this month a continuing trend of losses for the first six months of the year.

Mr Franz said Lufthansa losses would "increase significantly" in the coming year due in particular to the rise in fuel costs, unless there was an improvement in market conditions.

Previous efforts to cut costs, reduce capacity and slow capital investment in the crisis had proved insufficient. Mr Franz warned Lufthansa had become uncompetitive. "Many of our competitors are today producing at distinctly more favourable cost levels and can woo important customer groups away from us with more attractive fares," he said. The economic crisis had "bluntly" exposed the group's weakness, he said only days after taking over as head of the division.

Measures would include a 20 per cent cut in administrative staff in the airline, a loss of 400 jobs.

The German carrier, the biggest aviation group in Europe measured by turn-over, warned suppliers they would have to share the pain, and Mr Franz said shrinking cashflow would force the group to consider deferring deliveries of new aircraft from Boeing and Airbus from next year.

Lufthansa has one of the most ambitious order schedules for new aircraft of any airline in Europe with 160 jets, valued at €16bn at list prices before discounts, that must be financed between 2008 and 2014.

The group has already been one of the most active airlines in the capital market this year with two bond issues, the most recent earlier this month to raise €750m, as it seeks to shore up its shrinking cash resources.

Iata, the global airline trade association, warned yesterday that the latest passenger travel numbers cast doubt on the view that a bottom had been reached in the air travel sector.

Total passenger numbers fell by 9.2 per cent in May, the largest fall so far this year.

Most alarmingly for long-haul network carriers such as Lufthansa, Air France-KLM and BA, the numbers of passengers travelling on premium tickets were down by 23.8 per cent in May, after a decline of 22 per cent in April and a 19.2 fall in the first quarter.
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Old July 28th, 2009, 07:15 PM   #217
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Lufthansa seeks to extend deadline for AUA deal

FRANKFURT/VIENNA, July 28 (Reuters) - Deutsche Lufthansa has asked the Austrian Takeover Commission to extend the deadline to complete its deal on buying Austrian Airlines (AUA) as it scrambles to address EU antitrust concerns.

The German flagship carrier said on Tuesday it was nearing an agreement with the European Commission -- whose approval is required for the deal -- but would not be able to get formal approval of the acquisition by its self-imposed July 31 deadline.

Lufthansa said it had asked the Austrian Takeover Commission to extend the Aug. 31 to give it and the European Commission more time to reach agreement, after a weeks-long standoff over EU concerns that combining the airlines would affect fair competition.

The Austrian Takeover Commission said it would decide this week whether the deadline could be extended.

Both Lufthansa and Austrian Airlines declined to comment.

Austrian Airlines shares were 6.9 percent higher at 4.35 euros by 1120 GMT, buoyed by hopes that the long-running takeover process might finally be worked out. Lufthansa was 0.1 percent higher at 9.525.

"This (extension seeking) takes a little bit of the pressure out of the negotiations," said UniCredit analyst Katherina Kastenberger, adding that she thought there was now a stronger possibility of a deal being secured.

"It shows Lufthansa is still interested in AUA," she said.

At the end of last year, Lufthansa agreed to buy loss-making AUA, but said at the time that it wanted all of its conditions to be approved by the end of July, giving it an escape route if it the deal became too difficult or expensive.

Lufthansa has submitted new proposals intended to tackle antitrust concerns, the European Commission said, adding that it planned to market-test the new offer.

CLOSING THE DEAL

Lufthansa previous had agreed to concessions to allay the Commission's concerns -- after AUA approved a third cost-cutting programme to slim down ahead of the buy -- but there has been no approval for the deal.

The whole process has dragged on for nearly a year.

AUA lost 429 million euros ($612.5 million) in 2008 and has piled up more than 1 billion euro in debt, or more than five times its equity. It only survived the past months due to a 200 million euro lifeline by the Austrian government.

A source close to the deal said parties involved could come to an informal agreement this week.

"It has become more likely that there will be an informal agreement, a handshake (on conditions), but without anything written down or going through the bureaucratic measures," the person said.

The source also confirmed a report in Austrian daily Kurier that said Lufthansa was ready to give up some key takeoff and landing slots in Vienna to competitors to defuse monopoly concerns at the Commission.

Kurier reported that Lufthansa was prepared to yield six of 10 slots between Vienna and Frankfurt to other carriers like Austrian low-fare airline Niki and Slovenia's Adria Airways.

Peter Michaelis, head of Austrian holding company OeIAG, said he hoped talks were down to formalities.

"When all parties want it, we can do it and I still think the chances are very good that this deal will be sealed," he told Austrian radio.

He said the airlines had made "economically sensible" decisions related to route rights and timetables to ease talks.

"The details of remedies of Lufthansa's offer are the key to evaluate the attractiveness of the deal," said Equinet analyst Jochen Rothenbacher, adding he expected Lufthansa to use its strong negotiating position to get a good deal.

Analysts have said that while Lufthansa sees only 80 million euros of potential synergies from the deal, it will pay off in the long run as it gives access to growth regions in eastern Europe such as Krasnodar, southwestern Russia; Kosice, Slovakia; and Odessa, Ukraine. ($1=.7004 Euro)
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Old August 3rd, 2009, 01:36 PM   #218
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Lufthansa-AUA deal 'catastrophe' for Austria: Lauda
2 August 2009
Agence France Presse

Budget airline owner Niki Lauda portrayed Lufthansa's takeover of Austrian Airlines as a catastrophe for Austria, after it made large concessions to secure the deal, in an interview published Sunday.

"I'm surprised that Mr. Proell (Austria's finance minister) is now selling this as a big success," the former Formula One world champion turned entrepreneur told the daily Oesterreich.

"This is the biggest catastrophe (for Austria) since World War II," he added.

"It takes no skill to give away an airline and then still pay 500 million euros on top of that."

Finance Minister Josef Proell spoke Friday of a "great success", after the European Commission gave a conditional go-ahead to Lufthansa's takeover of Austrian Airlines (AUA).

Austrian Chancellor Werner Faymann told national television ORF however that the deal was an "emergency solution" but no "great victory."

"When the taxpayer has to pay 500 million, that's no success story," he said, although he added he was relieved the deal had gone through.

Lufthansa signed a deal last year to acquire a 41.6-percent stake in the loss-making AUA from the Austrian state holding company OeIAG for a symbolic one euro cent per share -- or just over 366,000 euros (518,000 dollars) in all.

Meanwhile, the Austrian state pledged to absorb 500 million euros -- or just over a third -- of AUA's debts to facilitate the takeover.

Despite his harsh words towards Proell, Lauda expressed his satisfaction with his part of the deal. It gives his budget airline Niki seven new take-off and landing slots in Germany, and will allow him to expand next year.
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Old August 28th, 2009, 09:13 PM   #219
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EU endorses Lufthansa's AUA buy with conditions

BRUSSELS/FRANKFURT, Aug 27 (Reuters) - German airline Lufthansa won European Union regulatory approval of its planned takeover of Austrian Airlines (AUA), the latest deal to boost its position in the fiercely competitive market.

Lufthansa said on Friday the EU's green light paves the way for it to integrate AUA into the Lufthansa group next month, ending months of negotiations with the EU Commission and adding to its trophy case of acquisitions.

The German flag carrier also recently bought Brussels Airlines in a deal worth up to 250 million euros ($359 million) and lifted its stake in British carrier BMI to 80 percent.

Airlines around the world are seeking to merge with or take over rivals to boost scale and expand into growth regions as travellers cut back on air travel in the global economic crisis.

In its talks with regulators, Lufthansa played hardball to limit the costs of its AUA acquisition, and ended up agreeing to some concessions only after the Austrian carrier had approved a third cost-cutting programme to slim down ahead of the buy.

The Commission, competition watchdog in the 27-country European Union, said Lufthansa would cede airport slots to rivals on routes from Vienna to Frankfurt, Munich, Stuttgart, Cologne and Brussels.

"This case shows that consolidation in the airline sector is possible with proper remedies to safeguard consumers' interests," European Competition Commissioner Neelie Kroes said in a statement on Friday.

Shares of Lufthansa rose 0.8 percent to 11.22 euros by 1109 GMT, while Austrian Airlines was up 1.6 percent at 4.47 euros.

UNDER PRESSURE

AUA lost 429 million euros ($616 million) in 2008 and has piled up more than 1 billion euros in debt, or more than five times its equity. It only survived the past months due to a 200 million euro lifeline from the Austrian government.

The EU executive on Friday also approved restructuring aid given by the Austrian government to loss-making AUA .

Analysts have said that while Lufthansa sees only 80 million euros of potential synergies from the deal, it will pay off in the long run as it gives access to growth regions in eastern Europe such as Krasnodar, southwestern Russia; Kosice, Slovakia; and Odessa, Ukraine.

Still, the purchase puts Lufthansa under pressure to safeguard its earnings in the short term, as demand for air travel remains weak and credit rating agencies are becoming more critical of the carrier's debt.

Standard & Poor's on Thursday lowered its rating on Lufthansa's debt to "BBB-", one notch above junk grade, saying it expected the recession to weigh on passenger numbers and yields until at least the end of 2009.

Rating agency Moody's had already said on Aug. 3 it would review its "Baa3" rating on Lufthansa's debt, which is also just one notch above non-investment grade, for a possible downgrade after the carrier posted weak second-quarter results.

Lufthansa is one of only a handful of airlines around the world that have an investment grade rating, and a cut to junk would hurt its image as a financially strong company, and raise its interest payments on debt.
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Old September 3rd, 2009, 05:43 PM   #220
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Lufthansa plans squeeze-out of AUA shareholders

FRANKFURT, Sept 3 (Reuters) - Deutsche Lufthansa said it planned to squeeze out minority shareholders of Austrian Airlines (AUA) , which it bought on a Thursday to become Europe's biggest airline.

After closing the deal, the German flagship carrier said it had obtained more than 90 percent of AUA shares. Remaining minority shareholders now have until Sept. 9 to accept Lufthansa's 4.49 euro per share takeover offer.

That is close to AUA's current share price, which at 1112 GMT was down 0.7 percent at 4.47 euros while Lufthansa's shares were 2.1 percent higher at 10.87 euros.

Lufthansa has been battling Air France-KLM and British Airways for pole position in the European aviation sector and it has spent far more on purchases over the past year than its rivals.

Last week, it got the regulatory green light to merge with AUA. The acquisition adds to Lufthansa's recent purchases of Brussels Airlines as well as a majority stake in Britain's bmi [BMID.UL] and brings its passenger numbers to around 100 million a year.

Airlines around the world have been buffeted by a slump in demand for air travel and rising jet fuel prices over recent months. Oil prices have about doubled from lows of $34 per barrel recorded earlier this year.

Lufthansa management board member Stefan Lauer said he expected that global airlines' losses this year could exceed industry body IATA's estimate of $9 billion as no improvement across the sector was in sight so far.

"We cannot expect a miracle from one day to the next," he said to journalists late on Wednesday in remarks embargoed until Thursday.

STRENUOUS EFFORTS

IATA, whose 230 member airlines fly some 93 percent of international air traffic, said on Monday the world's airlines lost at least $6 billion in the first half of the year as higher oil and jet fuel prices added to costs.

Lauer said it would take strenuous efforts for Lufthansa to reach its 2009 earnings targets.

The carrier has said it aimed to cut annual costs by 1 billion euros ($1.4 billion) by 2011 and warned it could post a 2009 operating loss.

Analysts have said that while Lufthansa sees only 80 million euros of potential synergies from the deal, it will pay off in the long run as it gives access to growth regions in eastern Europe such as Krasnodar in southwestern Russia, Kosice in Slovakia and Odessa in Ukraine.

AUA lost 429 million euros in 2008 and has piled up more than 1 billion euros in debt, or more than five times its equity. It only survived the past months due to a 200 million euro lifeline from the Austrian government.

"AUA does not have a product problem, it has a cost problem," Lufthansa's Chief Executive Wolfgang Mayrhuber told journalists at a press conference in Vienna on Thursday.

He said AUA was still burning cash now but aimed to become cash positive by 2010 and earn its cost of capital as soon as possible. ($1=.7000 Euro)
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