Lufthansa bid of Austrian Airlines set to stall

July 10, 2009

, BRUSSELS, July 10 – Lufthansa\’s takeover bid for Austrian Airlines was on the rocks on Friday, after the German flag carrier failed to address EU competition concerns, a European Commission spokesman said.

"We have not received anything formal from Lufthansa," to address commission concerns, a spokesman on EU competition issues said, with the German company\’s offer for Austrian Airlines set to expire on July 31.

"Unless we received concrete proposals from Lufthansa within the next few hours it would be impossible" to meet that deadline, said the spokesman Jonathan Todd.

Lufthansa signed a deal last year to acquire a 41.6-percent stake in AUA from the Austrian state holding company OeIAG for the symbolic sum of one euro cent per share or just over 366,000 euros (518,000 dollars) in all.

One of the conditions was an agreement that the Austrian state would absorb 500 million euros — or just over a third — of AUA\’s debts.

But those terms have enraged rival airlines, such as Air France-KLM, which had also sought to buy AUA, as well as other airlines such as British Airways and Irish low-cost carrier Ryanair.

The commission has expressed concern that the takeover could lead to higer ticket prices for passengers and possibly fewer flights on some routes.

Todd appeared perplexed by Lufthansa\’s decision not to offer any formal remedies to the commission\’s concerns — an informal but unacceptable proposal was made.

"It is very difficult to understand why not, if they were genuinely interested in having a rapid, positive decision from the commission," he said.

Lufthansa is not expected to renew its bid after July 31.

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