For Osterreichische Industrieholding AG’s share of Austrian Airlines, Lufthansa was said to have paid €366,268 for its 41.6 percent shares in the company. This means that Lufthansa bought about 36,628,791 shares at €0.01 per share.

However, as part of the deal, Lufthansa agreed to pay €166 million at €4.49 per share for 36,959,414 shares that are held by private shareholders. This amount of shares equals about 41.9 percent of the share in Austrian Airlines.

The German carrier went on to tell shareholders that all people who have offered their shares in the company for sale by May would be paid as well. The remaining 10 percent of Austrian Airlines, which is owned by the private and minority shareholders, will be given to September 9^th to sell their shares of the airline.

Lufthansa has noted that it would do its very best to squeeze out the rest of the minority shareholders. The share offer for Austrian Airlines was approved by 85 percent of its shareholders. This is well above the 75 percent threshold that is needed under the takeover terms.

Austrian Airlines is just the latest airline to be joining the Lufthansa group after bmi and Brussels Airlines did earlier this year. The feature of Austrian Airlines is less in doubt now that the responsibility of the mounting debt has been passed on to Lufthansa.

The European Commission antitrust chief, Neelie Kroes, made this announcement just after a series of talks were concluded with the chief executive of Lufthansa, Wolfgang Mayrhuber. Kroes, had already instructed to draft a conditional clearance decision. This draft will then be considered by the European Union member countries, and a final proposal will be presented for adoption by the commission. This will all happen as soon as possible.

The takeover will also be given a restructuring bailout from the Austrian government of almost €500 million, and Lufthansa will be offering €4.49 a share for Austrian Airlines’ outstanding shares. The new proposal was accepted just after the Austrian Airlines takeover committee granted Lufthansa extended time to back out of the deal. The original date for the last day that Lufthansa could back out of the deal was set for July 31, but the extended time gave Lufthansa until August 31.

Before the deal was accepted, the European Commission had rejected several proposals over fears that Lufthansa would gain a monopoly on routes between Vienna and other European cities. They also had fears that Lufthansa would gain a monopoly in Switzerland as it already owns Swiss International Air Lines as well.

The newest offer was accepted after Lufthansa said that it would relinquish slots on five city routes flying out of Vienna. During this time the European Commission also sent out questionnaires to Lufthansa’s competitors, as well as interested parties, to find out whether they agreed that what Lufthansa was offering was enough.

The Austrian commission said that the deal is looking more likely, following the new proposal that Lufthansa has sent in to the European Commission. If the deal is accepted by the European Commission, then Lufthansa can get an early approval on the deal.

The Austrian commission said that the whole point to extending the deal was to prevent a failure in the offer. The deal may have fell through if the airline did not approve the extend deadline. As of right now, the European Commission is still looking over and investigating the new proposed deal that Lufthansa has sent into them. In order to get a quick decision made, Lufthansa has said that it would give up a number of routes that will be open to other airlines for free.

Some of the daily flights that may be freed up would be three daily flights to Stuttgart and three to Cologne from certain airports. There could also be five flights a day on the Frankfurt route and up to four flights a day on the Munich and Brussels routes. If the deal is approved, then these routes will be offered to other airlines that are not fellow Star Alliance members first. This could give some other airlines a key chance to grab some routes that use to be held only by Lufthansa.

This new offer follows a meeting that took place between the European Union’s competition commissioner, Neelie Kroes, and the Lufthansa chief executive, Wolfgang Mayrhuber. The European Union said, after receiving the new proposal, that they would now market test it.

The commission is still a little scared that Lufthansa would or could gain a dominant position on routes into Austria from Germany and Switzerland. This is because Lufthansa already owns Swiss International Airlines as well.

The timing of this new proposal being approved is becoming increasingly important. A July 31 deadline for the European Union’s approval is one of the conditions of Lufthansa’s earlier offer to Austrian’s shareholders.

The approval has been bogged down for several weeks now over a number of routes, which Lufthansa should give up in Vienna. However, Lufthansa is insisting it could not relinquish the amount of routes that the European Union wants and still makes the deal economical.

A lot of people that are close to the talks said that Lufthansa has managed to secure additional cost savings from Austrian’s unions, making further concessions to Brussels financially viable for the first time. Of course, Lufthansa’s main European rival, Air France, has been against the deal from the start. They are against the state aid of €500 million, which halves the Austrian debt right away.

The new terms that have been made are to address the regulator’s fears over the lack of competition if these two airlines join together. The fear exits on routes between Vienna and a number of other European cities.

Just last Friday, European Competition regulators gave a very cautious reaction to the latest proposal from Lufthansa. Thus, this simply means that the completion of this deal still remains uncertain.

The European Competition commissioner, Neelie Kroes, has invited the Lufthansa head to meet to discuss the new terms. European Competition officials say that they need further clarifications and remained tight-lipped as to whether the most recent proposals were sufficient.

This approval process has been bogged down for several weeks now over a number of routes, which Lufthansa should give up in Vienna. However, Lufthansa’s insisting it could not relinquish the amount the European Competition Commission has wanted for fear that it would make the deal uneconomical.

Just last week Lufthansa managed to secure additional cost savings from Austrian’s unions. Of course, Lufthansa’s main European rival Air France has been very critical of the deal, as it does involve a state aid of €500 million. Experts say that clearing this deal could be far from over, with the European Commission continuing to be unsatisfied with Lufthansa’s propsals.

Right now Lufthansa, the German flag carrier, is still hoping for a quick decision on the takeover of Austrian Airlines by the European Commission. Reports show that a quick decision by the European Commission could still be reached this month if further concessions are made. These reports were confirmed by the European Commission, who said that a quick decision for this month could still work if the German carrier would agree to some regulatory conditions.

A spokesperson for the European Commission said that Lufthansa has still not offered a satisfactory deal that demands a quick decision. They went on to say that they have now given Lufthansa a deadline, and the quicker that they come up with the perfect remedies, the quicker they will make their decision on the case at hand. However, the European Commission did note that they have had no indications since last Friday that they were going to submit anything new. Until this is done, the European Commission cannot go forward.

Lufthansa reported that it did submit an informal package just last week that met around 90 percent of what the European Commission wanted. Lufthansa decline to say whether any other concessions would be made. However, by this coming Friday, the European Commission says that Lufthansa has to come back with a concrete concession or wait till November for their answer.

The European Commission did make note that they did receive an informal offer, but it was not what they wanted to see and said that it was even worse than what was previously on the table.

For more information visit: www.lufthansa.com

European Union regulators are now launching an investigation into Lufthansa’s bid for Austrian Airlines. The investigations has been started, because experts are saying that this new deal could actually reduce choices for passengers and hike up the fares of many routes. The European Commission has already said that it has serious doubts about if the takeover could proceed without the airlines making some changes.

With this takeover, the European Union says that Lufthansa would become way too powerful with flights from Vienna, as well as other European cities. Lufthansa is the biggest German airline, and Austrian Airlines dominates most of the routes out of Austria.

However, it has also been noted that Lufthansa has already offered to make some changes for the European Union. However, the Union goes on to say that they are not sufficient enough to approve the deal at the current stage. The European Union says that it wanted to look at more problems and solutions.

The regulators cannot take an additional 90 days to go over the deal. Lufthansa also has the right to pull out of the deal if the European Union does not come through by July 31. Antitrust European Union officials have been separately looking into whether the Austrian government is selling Austrian Airlines to Lufthansa for a fair price. This investigation was launched back in February because they believed that the price could be too low and may be an illegal state subsidy.

However, no other word has been given out on what has been found so far in the investigation. Not much has been said from either airline as of yet.

For more information visit: www.lufthansa.com

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.

Learn more at: www.aua.com/us/eng

This news sent the stock of Austrian Airlines rocketing by 7.9%, which is 39 euro cents, to 5.35 euros during Vienna trading on Monday. This makes the first time that Lufthansa has announced their interest to the public in buying out Austrian Airlines, which has suffered much, its shares falling 37.5% since last year. Lufthansa has continued to stay on the sidelines during the last year, refusing to get drawn in on the bidding with Alitalia or Iberia. However, it is clear now that they plan to nab the Austrian carrier from underneath Air France KLM, who has also been reported as being interested in the deal.

Austrian Airlines might not be a big acquisition, as the airline is valued at 450 million euros right now, however, the carrier will do great things for the exposure of Lufthansa in Eastern Europe, pending the deal is completed. Austrian Airlines is also focusing on 2 growth areas, Eastern Europe and the Middle East, of which they hope will offset their losses during the era of record high oil prices, as well as an increase in competition.

Go to www.lufthansa.com -or- www.aua.com to learn more.

Austrian Airlines, which serves the destinations in eastern European from their hub in Vienna, has been bearing the brunt of the record high price of fuel, and they are slowing down the economy of Europe. They gave a warning last month that reported they could have as much as a 90 million euro net loss for the year. In a news conference, Alfred Oetsch, the Chief Executive of the airline, said that he will have to cutback on jobs and cancel some of the airline’s destinations if the government does not approve of the sale by August. Wilhelm Molterer, the Finance Minister, is in favor of the sale, while the Social Democrats of Chancellor Alfred Gusenbauer are in doubt. However, their new leader, Werner Faymann, Transport Minister, has stated that he isn’t against it in principle.

Go to www.aua.com to learn more.