Lufthansa bid for Austrian Airlines

Deutsche Lufthansa, launched its bid for struggling Austrian Airlines after the German airline's board approved a plan to make it Europe's biggest carrier.

Frankfurt-based Lufthansa said it would pay as much as €377 million in a performance based deal. It revealed its interest in Austrian in August of this year and the pair have been in exclusive talks since November.

The German carrier is to pay an initial €366,000 for the Austrian government's 42 per cent stake, and may pay a further €162 million for it, depending on Austrian's future performance and on the Lufthansa share price.

The outstanding shares not owned by the Austrian government would then cost Lufthansa an additional €215 million at €4.44 per share, it said.

Lufthansa said that despite the troubles facing the industry, the outlook for the combined company was good.

"The consequences of the financial markets crisis and its effects on the real economy have a major impact on the aviation industry," Lufthansa said in a statement.

"Structural changes increase the likelihood of Lufthansa and Austrian Airlines sharing a brighter future."

Lufthansa shares were up 0.3 per cent at €10.36, unchanged from where they were before the company released the statement.