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Lufthansa offers concessions to EU antitrust investigators

Jun 12, 2009

Deutsche Lufthansa AG, Europe’s second-biggest airline, offered concessions to EU antitrust investigators to allay competition concerns about its plan to purchase Austrian Airlines AG.

The European Commission will extend its review of the deal until July 1, the Brussels-based agency said today in a statement. Austrian Airlines said the carriers are discussing overlapping routes with the commission. The regulator did not specify what Lufthansa proposed.

“The European Commission has brought forward competition objections regarding individual routes,” Pia Stradiot, a spokeswoman for Austrian Airlines, said by telephone from Vienna. “We continue to be confident that the deal will be closed by the summer.”

Cologne, Germany-based Lufthansa reached agreement with the Austrian government on Dec. 5 to buy the state’s 42 percent holding in the carrier that serves 61 locations in central and eastern Europe. Lufthansa is leading consolidation in the European airline industry after acquiring stakes in Brussels Airlines and BMI in the U.K.

“If there’s monopolistic positions, then it would likely be on routes to central and eastern Europe, but that’s exactly what Austrian Airlines offers,” said Martina Noss, an analyst with NordLB in Hanover, Germany.

Sharing Costs

Even before any conditions, the deal was expensive for Lufthansa, because of the Austrian carrier’s debt and the limited ability to share costs between the airlines, Noss said.

Stefanie Stotz, a Lufthansa spokesman in Frankfurt, said the company is optimistic the deal will be approved by the commission.

“We’re in talks with the EU to close all the open questions,” Stotz said by phone. She didn’t say what the company had offered to the regulator.

The commission is separately conducting an in-depth investigation into whether Austria’s restructuring and sale of Vienna-based Austrian Airlines to Lufthansa conform to EU rules on state subsidies.

The government needs EU approval to take on 500 million euros ($701 million) of Austrian Airlines’ debt as part of a Dec. 5 agreement for Lufthansa to buy the state’s stake.

Lufthansa offers concessions to EU antitrust investigators
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