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Austrian Airlines


Austrian government says airline must stand alone

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May 08, 2008

VIENNA - Austrian finance minister Wilhelm Molterer said on Thursday troubled Austrian Airlines should remain an independent carrier.

In a deal announced in March, Saudi-Austrian investor Sheikh Mohamed Bin Issa al Jaber was to take a 20 percent stake in the airline via a capital increase at 7.10 euros per share, substantially higher than the current market value, for about 150 million euros ($230 million).

However, al Jaber has threatened to pull out after the airline posted a first-quarter EBIT loss of 50.1 million euros ($76.80 million) in April, much worse than expected, sending the shares sliding.

The airline wants an injection of funds to expand, notably in the Middle East, and it says talks are going on with al Jaber.

Molterer said in Parliament: "AUA is an important Austrian flagship company and thanks to its internal situation, competition from low-cost airlines and high fuel prices, is in a challenging situation.

"We should consider together what will be the best strategy to keep it red-white-red (the colours of the national flag) ... the standalone model is the ideal one," Molterer said.

Molterer has acknowledged taking part in emergency talks between the airline and shareholders this week but has not said what the state might do.

The airline has said it does not understand the reasons for al Jaber's plan to pull out of the deal and rejected his allegation that he was misled over its finances.

Its annual meeting on Wednesday approved the capital increase but it was unclear who would subscribe to it.

Some market players have speculated that Austrian Airlines cannot emerge from its present imbroglio without some kind of arrangement with a rival and have mentioned Lufthansa and Emirates.

reuters.com

Austrian government says airline must stand alone
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