Austrian Airlines (AUA) is taking a controlling stake in rival Lauda Air, incorporating it into a national-airline group alongside regional carrier Tyrolean Airways.

"The Austrian market is too small for three competing airlines, so it is our strategy to work jointly to be more competitive with other major carriers," says AUA. The airline already owns nearly 43% of Tyrolean, with the remainder in private hands.

AUA is buying 19.7% of Lauda from Lufthansa, which will retain a 20% stake in its Austrian partner, and a further 9.7% from the airline's chairman, Nikki Lauda, who will keep a minority 30%. The remainder of the Lauda shares are publicly floated.

Despite effectively halving its share in Lauda, Lufthansa insists that it will continue to co-operate with the carrier as before and adds that it is now considering how it will work in future with the three Austrian airlines.

AUA already co-operates with Lufthansa in areas such as Airbus aircraft maintenance and ground handling, and believes that there is potential for closer ties. The Austrian airline claims that its close ties to the rival alliance with Swissair, Sabena and Delta Air Lines will not be a hindrance. Two years ago, Lufthansa had tried to tempt AUAaway from Swissair, but without success, prompting the the German carrier to raise its stake in Lauda.

The addition of Lauda to the Austrian Airlines Group allows the capacity of all three Austrian airlines to be co-ordinated. AUA says that it will concentrate primarily on scheduled services, with Lauda focusing on tourist routes and Tyrolean operating short-haul and regional routes.

The three Austrian carriers together have a revenue close to Sch20 billion ($1.8 billion). AUA has 32 aircraft, mostly jet-powered airliners, while Lauda has a 19-strong fleet and Tyrolean operates 26 regional aircraft.

Source: Flight International