German flag carrier Lufthansa has completed the takeover of rival Austrian Airways following months of tense negotiations.
The Cologne based airline will pay around €166 million (£150 million) for private Austrian Airways shares while also paying €350,000 for the stake presently controlled by the Austrian government.
“Today marks the conclusion of the privatisation of Austrian Airlines,” explained Peter Michaelis, the head of Austria’s privatisation agency.
“It was unquestionably hard work but we can now say it was worth it – firstly for AUA but ultimately for Austria.”
The European Commission sanctioned the deal last week, following an agreement between the two airlines in December 2008.
However, the industry remains unimpressed by the move.
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Ratings agency Moody’s cut the airline’s credit rating to ‘Junk’, downgrading the German flag carrier from Ba1 to Baa3.
This is principally based on concerns over Lufthansa’s debt, with Moody’s explained the decision “reflects predominantly our view that the very weak market conditions, with pressure on yields and volumes being reflected in the decline in operating profits in both the passenger and cargo divisions, will weaken credit metrics well beyond the parameters that we had set for the previous rating category”.
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