EU postpones ruling on Austrian Airlines-Lufthansa deal

The European Commission is split over Lufthansa's takeover of Austrian Airlines and the long-expected ruling on the deal has been delayed by another two weeks, the daily Der Standard reported yesterday.

Originally, Brussels had been scheduled to decide on the takeover of the ailing Austrian carrier by the German rival tomorrow.

But Transport Commissioner Antonio Tajani and Competition Commissioner Neelie Kroes cannot agree on a €500million subsidy from the Austrian state at the centre of the deal, the newspaper reported, quoting sources in Brussels.

The final decision has now been set back by two weeks and may even see the deal unravel completely, it said. Der Standard said that Tajani had more or less rubber-stamped the takeover of loss-making AUA by its much-bigger German rival, arguing that it would less expensive than restructuring the Austrian carrier so it that it could survive on its own, placing it in insolvency, or liquidating it completely.

But Ms Kroes had vetoed approval, insisting that the Austrian state subsidy can only be allowed if there is a much deeper restructuring, including a massive reduction of routes, Der Standard reported.

Lufthansa has warned that it might not go ahead with the deal if the conditions that Brussels are too restrictive.

Last month, the German flag carrier said that more than 85 percent of AUA's shareholders had accepted its takeover offer.

Lufthansa wants to acquire AUA fully and signed a deal at the end of last year to acquire a 41.6-per cent stake in AUA from the Austrian state holding company OeIAG for the symbolic sum of one euro cent per share or just over €366,000 in all.