Lufthansa CEO expecting formal approval of Austrian Airlines merger soon


“We welcome the positive signals we have received from Brussels and are counting on formal approval soon of the merger with Austrian Airlines,” said the chairman and CEO of Deutsche Lufthansa AG, Wolfgang Mayrhuber. “In taking this course, the EU Commission underlines its strategy to give the European airline industry a chance to persist amid global competition. Also, a market with the size of Austria can keep its international connections. The strategy thereby ensures competition, which has risen steeply and steadily since deregulation and liberalization of the market. The interests of customers and locations are taken into account adequately.”

Earlier, the directorate general of the EU Competition Commission had expressed its support for the granting of anti-trust immunity for the merger with Austrian Airlines under economically-acceptable conditions to Lufthansa. “A prompt go-ahead for the merger is essential for Austrian Airlines, the airport Vienna and all the partners involved in air traffic to obtain planning security and to undertake the necessary measures resolutely,” Mayrhuber emphasized.

In order to finalize the measures required for a successful transaction, Lufthansa amended its last offer after intensive talks with the directorate general of the EU Competition Commission and the completion of the market tests with competition commitments. Since substantive agreement had become apparent, while the EU Commission, as a collegiate body, was unable to give its formal approval by the July 31, 2009 deadline, Lufthansa in consultation with the Österreichische Industrieholding AG (ÖIAG) applied with the Austrian Takeover Commission for an extension of the deadline up to August 31, 2009.

With the formal go-ahead from the EU Commission for the merger and approval of a partial relief of Austrian Airlines by the extended deadline, all the necessary prerequisites for the tie-up between Austrian Airlines and Lufthansa would be met. The approval of the partial relief of Austrian Airlines´ total indebtedness of 500 million euros from the ÖIAG has to be granted under economically-acceptable conditions for Lufthansa.

Despite thorough analysis, differing opinions, and tough negotiations between the parties, one was at all times seeking a constructive solution, Mayrhuber observed. He added: “The merger of the two airlines is in the interests of all stakeholders. Customers will have continued access to a dense network with attractive connections. The international importance of Vienna as a business center will be secured in the long term by cooperation with Lufthansa as the partner of Austrian Airlines. Eastern Europe will also retain important connections through the Vienna hub, which are of major significance for the economic development of this region. Under the terms of the public takeover offer, the shareholders will receive a very good price for their shares. The staff of Austrian Airlines has the chance to secure employment and, therefore, create perspectives for the future.”

Share transaction
More than 88 percent of the shareholders of Austrian Airlines had offered to sell their stock to Lufthansa by May 11, 2009. The shareholders will receive the takeover price of 4.49 euros per share no later than ten trading days following formal approval of the merger from the EU Commission. For all shareholders of Austrian Airlines who have not yet accepted the offer, the acceptance period has been prolonged following the extension of the deadline for the takeover offer. Instead of August 14, 2009, these shareholders can now sell their shares up to eight days after publication of the fulfilment of the conditions of the takeover bid concomitant with the EU formal approval. These shareholders will receive the takeover price no later than ten trading days after the expiry of the extended period for selling their stock.

Upon completion of the public takeover offer, Lufthansa will seek through a squeeze-out to acquire the stock of the remaining shareholders of Austrian Airlines in order to take over the company completely.