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Austrian Airlines

Austrian minister foresees major partner for airline

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Jun 10, 2008

Austrian Airlines Group is most likely to seek links with a major partner, and the government may sell its entire stake to help the process, Finance Minister Wilhelm Molterer said. The stock fell the most in 6 1/2 weeks.

``A tie-up with a partner is, for me, the most likely scenario,'' as the airline will be unable to remain independent because of financial difficulties and industry woes, Molterer said at a press briefing in Vienna today. ``Given the economic situation, a stand-alone option has become rather improbable.''

The government, which holds 43 percent of Austrian Airlines, wants to decide on the carrier's future by ``autumn,'' said Molterer, who is head of the country's People's Party. The Social Democratic Party led by Chancellor Alfred Gusenbauer, the ruling- coalition partner with the People's Party, said options should continue to include keeping the airline independent.

Austrian Airlines said yesterday that it will post a full- year net loss of as much as 90 million euros ($139 million) after incurring an additional 130 million euros of costs for jet fuel. Der Standard reported earlier today that the government plans to sell a stake through a Europe-wide bidding process aimed at ensuring Vienna International Airport remains the company's base.

`No Rush'

``The carrier is of utmost importance for Austria as a business location,'' Deputy Finance Minister Christoph Matznetter, a Social Democrat, said by telephone from Vienna today. ``There is no rush to sell the carrier in the form of a summer sale, and I could also imagine a stand-alone option where the carrier gets fresh capital to expand and grow.''

Austrian Airlines fell 16 cents, or 7.4 percent, to 3.77 euros in Vienna trading, the lowest price since April 30, in the biggest drop since April 24. The stock has fallen 40 percent this year, valuing the carrier at 323 million euros.

Newspapers in Austria including Format have reported in the past month that Air France-KLM Group and Deutsche Lufthansa AG, Europe's two biggest carriers, as well as Moscow-based OAO Aeroflot are interested in taking part in the process.

``If necessary, we are prepared to sell a stake,'' Molterer said at the press conference, adding that he will discuss disposing of the entire holding ``if this is necessary to find a partner.''

The government is considering Austrian Airlines' future after the failure in May of a stake sale to Saudi investor Mohamed bin Issa al Jaber. Talks collapsed after the airline said its first-quarter loss widened. The transaction would have provided Al Jaber with a 20 percent holding through the sale of new stock, with the state keeping control of the airline in partnership with Austrian institutional investors.

``An outright sale is not what the Austrian people want, and we think the government should keep a stake,'' Deputy Minister Matznetter said.

Austrian minister foresees major partner for airline

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