By Steve Goldstein
LONDON (Dow Jones) -- European airline consolidation nudged
forward Friday, as Lufthansa made a bid for the publicly traded
shares of Austrian Airlines and Iberia Lineas Aereas de Espana said
it was still in talks with British Airways.
Already, Air France and KLM have merged into Air France-KLM and
Lufthansa has acquired Swiss, among other European airline
deals.
British Airways has been in talks with several partners, and
still has active merger talks with Spain's Iberia as well as an
application for antitrust immunity to cooperate with AMR Corp.'s
(AMR) American Airlines.
The BA-Iberia talks have lumbered on as the two carriers haven't
reached a deal on price, with BA's pension liabilities a key
sticking point.
Fernando Conte Garcia, chairman and chief executive of Iberia,
said on a conference call that the valuation debate is still
continuing. He expects talks to end next month.
Iberia on Friday said it swung to a fourth-quarter loss of 19
million euros ($24 million) after earning 105 million euros in the
year-earlier period.
Revenue fell 3% to 1.37 billion euros.
During the quarter, passenger traffic fell 9%, and the airline's
5% capacity reduction wasn't enough to offset that.
Costs also rose 5% during the quarter.
Garcia said Iberia is in talks to delay the delivery of three
Airbus A340s by a year.
Iberia shares slipped 2.7% in Madrid, and have dropped 27% over
the last 12 months.
Meanwhile, shares of Austrian Airlines climbed 14% to 3.95 euros
after Lufthansa offered 4.49 euros a share for the stock not held
by the Austrian government. The deal is contingent on European
Union approval for 500 million euros of Austrian state support.
Lufthansa already is due to pay the Austrian government up to
164 million euros for its 41.56% stake, depending on Austrian
Airlines' future economic performance and the Lufthansa share
outperforming its competitors.
"The European aviation industry is undergoing a fundamental
process of change and consolidation," Lufthansa said in a statement
on Friday.
"In the future, Austrian Airlines will be in a position to
benefit from the economies of scale, market presence and
competitive strength of Lufthansa. The integration into the
Lufthansa Group's multi-hub system will make the route network more
attractive for both partners' customers and secure the connection
of Vienna to other European and intercontinental business
locations."