UPDATE:EU To Propose Approval Of Lufthansa/Austrian Air Merger

Sunday 02/08/2009 - Source: airline-news

BRUSSELS -(Dow Jones)- The European Union's antitrust chief Neelie Kroes said Friday she intends to clear German carrier Deutsche Lufthansa AG's (LHA.XE) takeover of Austrian Airlines AG (AUA.VI), though with conditions attached.

After talks earlier Friday, Lufthansa offered further measures to allay competition concerns, the European Commission said.

"Commissioner Kroes has instructed her services to draft a conditional clearance decision," the commission's statement said.

The draft decision will be considered by EU member countries and a final proposal will be presented,for adoption by the commission "as soon as possible," it added.

Lufthansa is proposing to pay EUR4.49 a share for Austrian Airlines' outstanding shares. The takeover will also receive help from the Austrian government in the form of EUR500 million in restructuring aid.

The airline was already offering to give up slots on five city routes flying out of Vienna to ensure that it passes the European Commission's competition scrutiny, according to a document seen by Dow Jones Newswires.

The commission sent out a questionnaire to Lufthansa's competitors and other interested parties to see whether they think the offer made by Lufthansa was enough to remove competition bottlenecks identified in the commission's investigation into the takeover.

The deadline for companies to Reply to the commission's questionnaire was Thursday.

Lufthansa's latest offer was in response to the concerns raised by competitors, the commission said.