Lufthansa Says No AUA Deal Without Full EU OK

Lufthansa would drop its offer to buy Austrian Airlines (AUA) if the European Union did not approve all the conditions, its chief executive said on Friday.

When asked what would happen if Brussels did not okay the full EUR500 million euros (USD$633.8 million) in debt that the Austrian state would assume, Wolfgang Mayrhuber said: "Then the deal would collapse."

The Lufthansa CEO recently said he was not considering amending the offer but this marks the first time he said he would refuse to accept any changes to the terms by the EU.

His comments came shortly after the airline formally submitted its takeover offer for AUA at the announced price of 4.49 euros per share. The acceptance period opens on March 2 and expires on May 11, Lufthansa said on Friday.

European airlines including Air France-KLM and British Airways are seeking tie-ups to better weather the economic downturn and slumping demand.

In December, Lufthansa signed a deal to buy the loss-making Austrian carrier, expecting the move to make it Europe's biggest airline.

Under the deal, Lufthansa agreed to buy Austrian state holding company OeIAG's 42 percent stake in AUA and take over the airline completely for up to EUR377 million (USD$479 million).

The transaction, which needs European Commission approval, also involves the Austrian state assuming around EUR500 million of AUA debt.

The European Commission has said it had doubts on whether the amount of aid had been kept to a minimum and whether Austria's restructuring plan would restore AUA's long-term viability without the need for more funds in the future.