Dec 5, 2008, 15:23 GMT
Vienna - Lufthansa AG on Friday signed a deal in Vienna to buy 41.65 per cent of Austrian Airlines from Austria's state holding OeIAG, creating Europe's biggest airline.
The debt-ridden flag carrier will be sold for the token price of 366,000 euros (465,000 dollars), OeIAG confirmed in a statement.
To restructure Austrian Airlines, which sits on over 900,000 euros of debt and expects to end the year with a net loss of 415 million euros, quality and profitability would have to be raised, Lufthansa chief executive Wolfgang Mayrhuber said at a press conference in Vienna.
'This will not be easy, we know that,' said Mayrhuber, referring to the present global economic climate.
According to the deal, the Austrian flag carrier will retain its brand, and Lufthansa agreed to expand Austrian Airline's business and keep its long-distance connections.
The German carrier plans to take over 100 per cent of its smaller Austrian rival, first through the privatization, and then through buying free-floating shares.
The total price is expected to amount to 377 million euros.
One condition for the sale is that the European Commission approves the deal, considering its impact on competition, and the legality of a 500-million-euro cash injection for restructuring from the Austrian government.
OeIAG chief executive Peter Michaelis said he hoped get all necessary approvals by around May of next year.
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