Lufthansa Open To Austrian Talks, Watching Alitalia

Lufthansa is interested in holding intensive talks over a stake in Austrian Airlines with the Austrian government, executive board member Stefan Lauer said.

Lufthansa was also keeping a close eye on the Italian market, including developments at loss-making national carrier Alitalia, Lauer said.

Austrian government leaders said this week they would sell some of their stake in Austrian Airlines but would keep enough to ensure the government and Austrian core shareholders kept 25 percent.

"Austrian Airlines is an important partner for us. If the Austrian government comes to us and talks to us, we are of course interested in an intensive dialogue," Lauer said.

Austria owns 43 percent of the airline, worth some EUR145 million euros (USD$225 million) at current prices, via government holding company OeIAG. A group of Austrian banks and insurers owns 7 percent. The airline itself holds 3 percent, and 47 percent is in free float.

Lauer stressed the right model for any takeover was for the target to be integrated into the group but retain independence, as with its Swiss subsidiary.

The Italian government, meanwhile, is yet to decide on the fate of ailing Alitalia. A company source said this week the airline was waiting for the government to decide whether it ought to file for bankruptcy.

Lufthansa's Lauer said it had been right not to make an offer for Alitalia amid uncertainty over the carrier but said it was keeping track of developments.

"The market remains a prime market for us. We have our ear to the ground," said Lauer, adding that there was "no reason for us to be nervous here".

Lufthansa faced further strikes on Thursday after pilots at its CityLine regional carrier, which operates around 400 of the group's 2,000 daily flights, walked out for 36 hours at midnight local time on Wednesday in an ongoing pay dispute.

Lauer said Lufthansa would feel the financial impact of a series of strikes by pilots, ground staff and cabin crew in recent weeks. Consumer behavior was also likely to change by the end of the year.

Lufthansa would stick to its target to match last year's operating profit of 1.38 billion euros this year, he said.

"We find ourselves in a zone of global turbulence. Our belts are fastened. The belts need to be tightened further," Lauer said.

Lauer added that he was optimistic about reaching an agreement with pilots at its regional airline Eurowings soon.

(Reuters)