Air France ponders Austrian Airlines purchase

According to a Reuters News report, Air France-KLM is considering submitting a bid for Austrian Airlines. Austria’s flag carrier is currently undergoing privatization, and this Central European country’s government is looking to sell its 43 percent stake in the national airline. Air France has already gone ahead and hired a private company, Lazards, to examine the rationale of a potential bid, and whether a stake in Austrian Airlines would prove lucrative for the Franco-Dutch airline group.

Time, however, is quickly running out, since the Austrian government set out Sunday as the deadline by which time all interested parties must indicate their intention to submit a bid. As such, Air France is likely to determine within the next two days whether to proceed with a bid. If it decides to buy a stake in Austrian Airlines and ends up winning the bidding process, Air France-KLM would cement itself as Europe’s largest airline. The Franco-Dutch carrier, however, will almost certainly face stiff competition from Lufthansa. Most analysts believe that Germany’s primary airline is keen to buy up the state’s holding in Austrian Airlines, in order to solidify its market advantage in Central Europe. Lufthansa may also have luck on its side, as analysts believe that Austrian authorities still favour the German airline. But it would be too early to discount Air France, or even Turkish Airlines, which has signalled that it may be interested in submitting a bid.

If everything goes according to plan, Austrian Airlines’ privatization should be completed by the end of the year.

www.aua.com