Austrian Airlines Stuggle With Privitization

Austrian Airlines Group, a member of Star Alliance, has been continuing with its privatization strategy, even as their troubles finding new partnerships after dissolving older pairings with less desirable companions. AAG has been having a rough year, including legal wrangling with a wealthy Saudi investor and profit warnings. The state’s holding company, OIAG, is preparing to offload the 42.75 percent that it still holds in AAG, which has attracted the interest of financiers in Europe, Asia, and the US. Air France-KLM and Lufthansa have considered throwing their hats into the ring, as well. Russian airline giant S7 is also considering placing a bid for the outstanding shares in the state-run airline.

On the 12^th of September, non-binding offers were placed for the outstanding shares in the airline. OIAG has said that the schedule for the airline’s eventual sale is driven by political rather than financial considerations. However, after Austria’s elections late September, the process may be slowed considerably. The Saudi buyer interested in the airline was due to pay 150 million euros for a 20 percent stake in the airline, but that deal was canceled. “Austrian needs a strategic partner and not just a financial partner that puts them into a bigger network,” says Martina Valenta, equity analyst in the Vienna office of Austrian bank Erste Group. The most obvious choice for a buyout would be Lufthansa, since they are both members of Star Alliance. One stipulation for any deal, however, is that the state wishes to keep the headquarters in Austria.

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