AUA talks have ended

German airline Lufthansa has said the European Commission (EC) will make no more demands on the company over its purchase of Austrian Airlines (AUA) as talks on the deal came to a close, Austrian Times informs.

Lufthansa CFO Stephan Gemkow said today (Thurs) talks with the EC had finished and that it would continue to examine airline-industry markets and speak to Lufthansa’s competitors before announcing a formal decision on whether to approve the deal.

Gemkow added he expected the deal to be closed on 14 September.
But he refused to comment on reports that Lufthansa had agreed to give up 19 slots after EC pressure.

News of the end of the talks comes two days after the German airline extended its offer to take over struggling competitor AUA by one month to 31 August as it said an agreement with the EC over the deal was "likely".

Lufthansa bosses said a "material agreement" between the company and the EC was "likely" but "hardly do-able by 31 July".
Under terms of the sale, Lufthansa could back out of the deal if it does not get EC approval by the end of this month, and many experts believed that the German airline would do so.

The EC is reviewing the sale amid concerns over a possible Lufthansa monopoly when the Frankfurt-based firm takes over AUA. Competitors and analysts said the new company could hold a monopoly on routes between German cities and Vienna.
Another key issue is the 500-million-Euro rescue package provided by the Austrian government to avoid AUA’s immediate bankruptcy, which experts say could breach EU rules on state aid.

The EC refused to comment further on the improved takeover offer from Lufthansa it said it received on Tuesday.
Meanwhile Lufthansa released half year figures this morning showing its turnover had fallen 15 per cent to 10.2 billion Euros in the first six months of 2009 compared to the same period in 2008.

The airline lost 216 million Euros in the first six months of this year compared to a net profit of 381 million Euros during the same period last year.
Gemkow predicted that "weak demand will continue during the second half of the year" and that the cost of aviation fuel would continue to rise.
He added that Lufthansa had adopted a cost-cutting programme that would result in savings of one billion Euros by 2011 and warned that the airline would probably have to undertake "drastic measures" in future.

But he said the presentation of Lufthansa’s first-half results this morning had nothing to do with the deal with the AUA deal and had not changed Lufthansa’s "ambitions". He said AUA had to deal with the same difficult conditions as Lufthansa and its cost-cutting measures fitted perfectly with Lufthansa’s plans.

Source: Transportweekly