Austrian Airlines stake sale doubtful as potential investors seek time to evaluate bids

23 October 2008

The plans of the Austrian government to offload its 42 per cent stake in the debt-ridden Austrian Airlines seems to have run into some rough weather with potential buyers including Air France-KLM and the Russian airline S7 asking for more time since the global airline industry is going through hard times.

The deadline for firm bids for the government's stake has already expired, while a further deadline has been set for 24 October, 2008, and is fast approaching.

A report in August 2008 said that at least five international airline companies had expressed their formal interest in picking up a stake in Austrian Airlines, according to a report in the Austrian daily Die Presse. These included Germany's Lufthansa, Russian airline S7, Air France-KLM, Air China and Turkish Airlines, all of which have notified Austrian state holding company OeIAG of their interest. 

Air France-KLM are reported to have said that the current financial uncertainty in the global aviation industry has made it difficult for the airline to make an offer for Austrian Airlines. However, it has not ruled out a possible offer in the future.

Russian airline S7 is also reported to have said that it is considering a serious offer, but would set out conditions, and would need more time to structure its bid. In September 2008, while addressing a news conference at Vienna, S7's CEO Vladislav Filev had said the airline's offer would secure jobs both at Austrian and at Vienna International. He had said that by 2012, three million more passengers from Russia could be flying via a strategic hub in Vienna, and that would be a win-win situation for both the carrier as well as the airport.

A report in September 2008 in the Austrian magazine Format had said that S7's attempt to circumvent European regulations in its bid to take over troubled carrier Austrian Airlines might not succeed. It had said that if S7 gains direct majority ownership of Austrian Airlines, its European flight licence would be withdrawn on account of its status as a non-European Union carrier.