Lufthansa chief Wolfgang Mayrhuber insists Austrian Airlines must become profitable, after finalising a deal to acquire state holding company OIAG's stake in the carrier.

OIAG's board has approved the sale of its 41.56% Austrian stake to Lufthansa. The deal depends on Austrian and European approval for a €500 million ($632 million) restructuring package, a cost which will be met by the Austrian Government and will offset some of the airline's historic debts.

Speaking following the closure of the deal, which is expected to secure competition clearance by next spring, Mayrhuber said: "Only by combining our powers can we hope to find an answer to the global challenges currently facing our industry.

"For European business and Europeans as a whole, it is vitally important that we create an airline alliance consisting of profitably operating airlines...we also want to be quite clear about one thing, however: Austrian Airlines must become profitable again. If it is to do this, all those involved must make a contribution."

Welcoming the deal, Austrian Airlines chief Alfred Otsch adds: "The strategic concept removes our structural weaknesses, such as a lack of international sales strength and disadvantages in purchasing.

"Together with our own measures, this will enable the almost total retention of our network strength. As a result, the benefits for our customers can be retained. None of this would have been possible - even with a great deal of additional capital - had we tried to go it alone."

Following the acquisition Austrian Airlines will become a profit centre within Lufthansa Group, but will remain a legally-independent company, retaining its Austrian headquarters, long-haul presence, brand, fleet and crew. The tie-up between the two Star Alliance partners is expected to deliver €80 million in annual synergies.

OIAG chief executive Peter Michaelis adds: "The bidding process, while in turbulent circumstances, has served to produce a desirable result."

Lufthansa is acquiring OIAG's stake for just over €366,000, plus a performance-dependent payment of up to €162 million. In spring next year Lufthansa will launch a takeover offer to Austrian's remaining shareholders.

Source: Air Transport Intelligence news