Lufthansa-Austrian scrutiny goes on after top-level meeting

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Lufthansa has yet to receive any sign that its Austrian Airlines acquisition is nearing approval, despite a meeting between its chief executive and Europe's competition commissioner.

Chief executive Wolfgang Mayrhuber accepted an ad hoc invitation for discussions yesterday with the Commission's Neelie Kroes - evidence, says a source familiar with the situation, that Lufthansa retains the "highest interest" in the Austrian takeover, despite recent suggestions to the contrary.

The airline says it has spent several days answering Commission questions. But there has been no clear sign of progress and, 10 days from Lufthansa's deadline for sealing the acquisition, the German carrier remains uncertain whether the Commission's comment yesterday - that it was awaiting 'clarification' on Lufthansa's latest concession offer - necessarily indicate that the concessions are still unsatisfactory.

Lufthansa believes any attempt to extend its takeover proposition beyond 31 July would add a great deal of complexity to the situation, without resolving the fundamental issues of competition approval.

Failure to complete the takeover, however, means Lufthansa would have to back away from Austrian, potentially leaving it to surrender the airline to a competing bid.

"We are in constant talks with the Commission," says a spokesman for Lufthansa. "It's still their decision, but we're open for any discussion on points that need clarification."

Austrian's own cuts to its operation may help to ease competition concerns but Lufthansa is unlikely to enhance its offer to the Commission.

Lufthansa believes the competition environment has changed substantially, with carriers such as Niki and Adria Airways competing on the Vienna-Frankfurt and Vienna-Munich routes. Lufthansa, Austrian and their affiliate airlines nevertheless dominate routes between Vienna and Zurich, Cologne, Stuttgart and Brussels.