€200mn AUA loan scheme cleared

Pröll is chuffed. Foto: apa

By By David R. Hill

EC approve state scheme to help AUA ‘get back on its feet’.
Guarentees must be at market rates.

Vienna. The European Commission (EC) ann- ounced it had approved Austria’s 200-million-Euro package of loan guarantees for ailing Austrian Airlines Group (AUA).

The EC said it was granting approval on the condition aid was extended in the form of loan guar- antees at market rates with limits on the total amount necessary to rescue AUA.

An EC spokesman said the EC’s decision had not been based on the planned sale of AUA to German airline Lufthansa or on AUA’s long-term plans. The spokesman added the dec- ision constituted a short- term measure to enable AUA to resolve its liquidity problems and get back on its feet.

Austrian state holding company ÖIAG has guar- anteed loans to AUA to the tune of 200 million Euros.

Austrian ÖVP Finance Minister Josef Pröll’s spokesman Daniel Kapp said yesterday: "We wel- come the decision. We will have meetings to discuss further developments re- garding AUA.”

Kapp added Pröll would meet with EU Competition Commissioner Neelie Kroes this afternoon in Brussels to discuss AUA’s proposed sale to Lufthansa, which the EC has not yet approved.

Costs not jobs

The struggling carrier last week pledged to cut personnel costs rather than cutting jobs with represent- atives of AUA management and the workers’ council meeting for the first time.

Management is reported- ly considering ending employee vacations, among other things. Management representatives claimed AUA’s financial situation is not as bad as frequently portrayed by the media.

AUA, which has around 8,000 employees, has been sold to German airline Lufthansa, but the Euro- pean Commission must ap- prove the deal before it becomes final.

Lufthansa chief Wolfgang Mayrhuber said in Dec- ember he expected AUA to cut its costs but did not believe lay-offs would be necessary.

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