Lufthansa submits public takeover offer to the shareholders of Austrian Airlines AG

The offer represents a further step on the way to the complete takeover of Austrian Airlines by the Lufthansa Group. The Supervisory Boards of Deutsche Lufthansa AG and Österreichische Industrieholding AG (ÖIAG) had previously approved the purchase of the shares and the integration of Austrian Airlines AG into the Lufthansa Group. The corresponding agreements were signed on 05-Dec-08. Within the framework of these contracts, the parties also agreed on Lufthansa’s acquisition of the 41.56 per cent share in Austrian Airlines AG held by ÖIAG. The share package will be acquired at a price of EUR 66,000 plus an earn-out option. With the earn-out option, Lufthansa will pay ÖIAG a sum of up to EUR164 million depending on Austrian Airlines’ future economic performance and the Lufthansa share outperforming its competitors.

In the future, the Austrian Airlines AG shares will be held by the Austrian company, ÖLH Österreichische Luftverkehrs-Holding-GmbH, 50.2% of which is owned by ÖLP Österreichische Luftverkehrs-Privatstiftung and 49.8% of which is owned by ÖLB Österreichische Luftverkehrs-Beteiligungs-GmbH, a 100 per cent subsidiary of Lufthansa. The completion of the transaction is subject, inter alia, to the conditions precedent of anti-trust approval and the approval of a EUR500 million restructuring grant to be made by the Republic of Austria, both of which must be granted by the European Commission.

The European aviation industry is undergoing a fundamental process of change and consolidation. The aim behind the integration of Austrian Airlines in the Lufthansa Group is to consolidate the strengths of two airlines in order to sustainably strengthen the competitiveness and overall profitability of the partners in the Group. In the future, Austrian Airlines will be in a position to benefit from the economies of scale, market presence and competitive strength of Lufthansa. The integration into the Lufthansa Group’s multi-hub system will make the route network more attractive for both partners’ customers and secure the connection of Vienna to other European and intercontinental business locations. The essential factors of the integration are that the “Austrian” brand shall be preserved and Austrian Airlines shall remain an independent airline with its head office in Austria.

(c) Centre for Asia Pacific Aviation. Date posted: 02-Mar-09

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