Andrew Doyle/MUNICH

Lufthansa is reportedly in talks with SAirGroup over the purchase of the Swiss company's 10% holding in Austrian Airlines, which is being offered for sale after the Austrian flag carrier's defection to the Star Alliance.

Although the German airline will not comment on reports linking it to a move for the holding, SAir confirms: "We want to sell our stake in Austrian, but we are not providing details about talks or interested parties."

Lufthansa has been reluctant to cement alliance relationships via equity purchases, but is prepared to invest to protect strategic interests. It holds a 20% stake in Star partner British Midland and in Austrian Airlines Group carrier Lauda Air. It has offered to participate in the privatisation of several east European carriers and is expected to lead a Star bid for a stake in alliance member Thai Airways International.


Austrian and affiliates Lauda and Tyrolean Airways joined Star last month, having left the Swissair-led Qualiflyer Group after the collapse of its relationship with US Delta Air Lines, which linked with Air France. SAir had last year attempted to build its holding in Austrian by buying a 9% stake held by All Nippon Airways, now a Star member. The sale was blocked by the Austrian Government amid fears that SAir might gain a board veto.

Lufthansa's planned investment follows a tough year for Austrian Airlines Group, which saw profits before interest and taxes drop 73% to Sch290 million ($20 million) after failing to guard against fuel price rises. The group was also badly hit by disruption associated with the Kosovo conflict.

Net profit fell by over 80% compared with 1998, to Sch216 million, while turnover was up 4.4% to Sch21.36 billion.

Austrian says it will suffer "short-term negative effects and extraordinary expenditures" as a result of switching alliances. It admits that "the benefits resulting from entry into the Star Alliance must be rapidly implemented". Traffic agreements with Lufthansa and Scandinavian Airlines for flights to Germany and Scandinavia, respectively, "should have a positive effect", it adds, while a codeshare with United Airlines should cover 60 destinations by the year end.

• Lufthansa Cargo and Deutsche Post are to pool their 25% stakes in express packages carrier DHL International in a new joint venture company called Aerologic. The pair are also forming e-logic, a supply-chain management e-commerce joint venture. Deutsche Post will manage Aerologic and chairman Klaus Zumwinkel says the move is "an important step towards a successful initial public offering for DHL".

Source: Flight International