Lufthansa’s Austrian Airlines unit is set to receive a $675 million bailout from the government of Austria and other lenders, a move that seeks to protect Vienna as a transit hub, and safeguard “the bulk” of the airline’s 7,000 jobs.
According to a statement from the airline, the bailout will come in the following forms:
- $169 million in state aid to cover coronavirus-related losses
- $169 million injection of equity capital by Lufthansa
- $338 million in the form of bank loans, which will need to be repaid by 2026
However, the deal comes under a 10-year guarantee that Vienna will grow in proportion to Lufthansa group’s other hubs so that it is not disadvantaged in relation to rivals such as Munich in Germany or Zurich in Switzerland.
Other conditions of the deal include:
- Austrian Airlines to shift passenger traffic to the railways on short-haul flights in as much as adequate infrastructure is available, and direct access to Vienna Airport is ensured, based on a travel time of fewer than three hours.
- CO₂ emissions within Austria to be cut in half by 2030
- Austrian Airlines to increase jet fuel efficiency by 1.5% annually and to reduce average CO₂ emissions per 100 passenger-kilometers of the entire Austrian Airlines fleet, from 9.55 kg to 8.5 kg by 2030.
- CO₂ emissions are reduced by 30% by 2030 from the comparable level of 2005
Last month, the Lufthansa group received a $10.8 billion bailout from the German government. The bailout gave the government a 24% stake in the airline, which could rise to 25% plus one share in the event of a takeover attempt. Additionally, it gave the government two seats on its supervisory board and influences the block strategic decisions.
Read Also: Lufthansa to Get a $10.8 Billion Bailout from Germany
Austrian Airlines is the flag carrier of Austria and a subsidiary of the Lufthansa Group. Its headquarters and hub are at Vienna International Airport. As of July 2016, the airline flew to six domestic and more than 120 international year-round and seasonal destinations in 55 countries.
The Austrian Economic Chambers reports that the airline is linked to $3 billion in domestic value creation. Furthermore, the airline and its presence at Vienna airport is responsible for 17,500 jobs and $1.1 billion in taxes and duties.
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