Austrian Airlines secures €600m in bailout funds

Austrian Airlines secures €600m in bailout funds 1

Austrian Airlines has secured a €600 million rescue package from the national government and owner Lufthansa Group.

The carrier said the financial assistance was designed to support efforts to sustainably safeguard Vienna as an aviation hub in the long term.

According to the Austrian economic chambers, €2.7 billion in domestic value creation, 17,500 jobs and €1 billion in taxes and duties are linked to Austrian Airlines and its Vienna hub.

The Austrian government issued €150 million in direct state aid, Lufthansa issued €150 million in an injection of equity capital and the remaining €300 million are loans to be paid back to banks by 2026.

The €600 million total aid is €167 million less than originally reported by the airline, in part due to their ability to restart flying sooner than originally expected.

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In return for the cash, the Austrian Federal Government has received long-term, binding commitments about the development of the Vienna aviation hub, linked to strict ecological requirements.

The entire financing package is dependent on state aid for Lufthansa in Germany, the approval of all corporate bodies and the consent of the EU Commission.

“Austrian Airlines has been and is a fundamental part of the multi-hub strategy pursued by Lufthansa Group.

“Thanks to this rescue package in combination with the improved framework conditions of the Austrian aviation system partners, we see ourselves in a position to rebuild the flight hub in Vienna after the crisis and connect Austria with important destinations in Europe and throughout the world,” said Carsten Spohr, chief executive of Lufthansa Group.

Under the terms of the deal, the state holding company Austrian Holdings (ÖBAG) has right to appoint two people to serve on the managing board of Österreichische Luftverkehrs-Privatstiftung (ÖLP), the private foundation which holds a majority stake in Austrian Airlines (via the holding company Österreichische Luftverkehrs-Holding).

They will be expected to monitor compliance with all the conditions laid down in the agreement.

Moreover, one of these two individuals will also serve on the supervisory board of Austrian Airlines.

“I am relieved and thankful that we have succeeded together in making Austrian Airlines ready for take-off again,” said Austrian Airlines chief executive, Alexis von Hoensbroech.

“After almost three months on the ground, Austrian Airlines will lift off again and slowly ramp up its flight operations in accordance with international travel guidelines. We look forward to soon welcoming passengers on board our flights once again.”

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