Vienna - The takeover of ailing flag carrier Austrian Airlines AG by Deutsche Lufthansa AG is expected to be concluded by the end of the year, Austrian state holding OeIAG announced Thursday. Since Air France-KLM and Russian carrier S7 did not submit offers conforming to the specifications of the bidding process, OeIAG said, it would now enter into exclusive "closing talks" with Lufthansa about selling its 42.75-per-cent stake.
OeIAG Chief Executive Peter Michaelis confirmed expectations that Austria would effectively have to pay Lufthansa for the takeover by saying there would be a "negative sales price."
The German airline will only pay a symbolic sum for Austrian Airlines, according to Austrian media.
In late October, the government in Vienna decided to meet Lufthansa's demand and provide up to 500 million euros (627 million dollars) to Austrian Airlines after the deal is concluded.
"I expect the signing of contracts within a month, so that the necessary decisions can be taken at the next OeIAG governing board meeting on December 5," Michaelis said.
The Austrian carrier expects to end the year with a deficit of 125 million euros and is saddled with close to 1 billion euros of debt, mainly due to slowing demand and rising fuel prices.
Air France-KLM did not submit a valid bid until the deadline in October, but had said it was interested in continuing talks.
As a bidder from outside the European Union, S7 was not able to guarantee that Austrian Airlines would still have an EU operating license after a takeover, OeIAG indicated in its statement.
