Russia’s S7 Airlines is eyeing 42.75 percent in the state-run Austrian Airlines and the chance that it will succeed is solid despite the contest with Lufthansa.
Photo: Gennadiy Gulyaev
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Kingship In Austrian Airline
Russia’s second S7 Airlines is eyeing 42.75 percent in the state-run Austrian Airlines. Aeroflot first intended to bid for it as well but abandoned the idea, and the chance that S7 will succeed is solid despite the contest with Lufthansa. When making the final choice, Austria’s authorities will be governed by politics and the recent aggravation of Russia’s relations with the West because of the conflict with Georgia will be hardly decisive, the analysts speculate.
Yesterday was the deadline for submitting letters of interest towards the tender for the sale of the state-run stake in Austrian Airlines. One of the bidders for 42.75 percent is Russia’s S7, local Osterreich reported the same day. People in S7 confirmed they had sent that letter and would file the bid. It needs a stake in Austrian Airlines to promote its foreign business that is contained by the intergovernmental agreements. S7 frequently encounters problems with getting international quotas; for instance, it has been long endeavoring to fly to Paris, to no avail though.
According to Osterreich, six bidders will compete for Austrian Airlines, including Lufthansa and Air France-KLM, and Lufthansa is the strongest rival for the Russians. Austria’s leadership may favor it because it comes from the neighboring Germany and because Austrian Airlines is the member of Star Alliance, which Lufthansa heads. Aeroflot that belongs to the rival Sky Team viewed exactly that membership as the basic reason to stay away from the tender.
S7 will face no problems of the kind, a source with the airlines said. It has joined no international alliance yet and the respective decision will be made only in late this year.
S7 has a winning chance, said Informost General Director Boris Rybak. “In economic terms, the alliance with Lufthansa would be ideal. But a lot in this tender will depend on the standing of the buyer, the government of Austria, and on political reasons.” Spokesmen of Austrian authorities made clear already that Lufthansa didn’t fit them as potential buyer, Rybak explained. For that German company, developing its own hub in Munich is the absolute priority, and Austria apprehends that the best flights of its arlines will be transferred there.
The tension in Russia’s relations with the EU because of the conflict of Georgia and South Ossetia “has created negative political environment” for the acquisition of Austrian Airlines by S7 and may entail difficulties in the deal’s agreement, but this factor won’t be decisive, Rybak forecasted.
Today’s capitalization of Austrian Airlines on Vienna Stock Exchange amounts to roughly $664 million, and therefore, the market price for 42.75 percent could be $283 million. The stake is worth that money, Rybak specified, pointing out that Austrian Airlines is one of the best in Europe. S7 will find money, especially if it bids in consortium with a big bank, the expert concluded.
www.kommersant.com
All the Article in Russian as of Aug. 26, 2008
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