Lufthansa CEO Sees Little Chance For Takeover

April 16, 2007

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Lufthansa does not plan to team up with a partner to buy Iberia and sees the Spanish airline's share price as excessive, its Chief Executive Wolfgang Mayrhuber said on Monday.

Mayrhuber said the German airline could not afford the current "speculative prices" for Iberia, whose share price of around 4 euros has in part been driven by takeover talk.

"I currently see hardly any chance of doing anything that would make economic sense for us," Mayrhuber said in an interview on the sidelines of a European aviation summit in Frankfurt, referring to airline takeovers in general.

Separately Iberia Chairman Fernando Conte said the airline was waiting for more information from US private equity suitor Texas Pacific Group about its offer for the Spanish carrier and wants to know if TPG will partner on its bid with another airline.

Both airline managers said they were not in talks about Lufthansa buying its Spanish rival.

Mayrhuber said he expected Lufthansa to continue to grow organically, with growth expected in line with or faster than the market in 2007.

Iberia's Conte said he expected to receive more information from TPG in the next 10 to 15 days. Key questions remained on safeguarding traffic rights and whether TPG planned to partner with another airline.

"Without the Spanish partners we will lose our traffic rights, having merged. That's one of the biggest parts of our value," Conte said. "The second thing is we would like to know if they are going to partner with another airline or not."

Asked whether he would prefer an airline to take over Iberia or a private equity firm, Conte said it depended on the preference of Iberia's stakeholders and not just Iberia itself. "You have to consider all the indications."

Some 42 percent of Iberia is held by stakeholders including British Airways, Spanish banks and Spain's government. Lufthansa's Mayrhuber said he was not talking to British Airways about its Iberia stake.

TPG last month offered an indicative price of 3.60 euros a share for Iberia in a EUR3.4 billion euro (USD$4.6 billion) bid.

Shares in Iberia have soared almost 80 percent in the last six months on takeover interest in the Spanish carrier, giving it a market value of around EUR3.8 billion.

Shares in both Iberia and Lufthansa have risen amid market speculation of more consolidation in the European airline sector, especially before an "Open Skies" accord liberalizes trans-Atlantic routes.

Germany's WirtschaftsWoche magazine reported Mayrhuber had engaged a team of managers and external experts to look at a possible takeover of Iberia and that a deal was possible this month.

Mayrhuber told journalists on Monday that "of course Lufthansa is well advised" and that the airline is investigating "everything possible".

Lufthansa has said it has the financial capacity for purchases and plans to continue to participate in airline consolidation in Europe after buying Swiss.