Austria strikes 450 mln eur bailout deal for Lufthansa unit, sources say

Austria has agreed to a smaller than expected bailout package for Lufthansa unit Austrian Airlines of 450 million euros ($508 million) in loans and grants, people familiar with the matter said on Monday. The package consists of 300 million euros in six-year loans that the state will guarantee 90% of, as well as 150 million euros in grants, the people said. Lufthansa has also agreed to inject an extra 150 million euros into its Austrian unit, they added.

The agreement comes after a 9 billion euro bailout deal between Lufthansa and Germany. Austrian originally applied for 767 million euros in aid from its own government in April. Lufthansa declined to comment while the Austrian government said Chancellor Sebastian Kurz would hold a news conference on Austrian Airlines at 5 p.m. (1500 GMT) with Vice Chancellor Werner Kogler and Finance Minister Gernot Bluemel.

The deal does not involve Austria taking a stake in Lufthansa or Austrian, as Kurz had previously said it might, the sources said. One of the people familiar with the deal outlined further details that Kurz and his colleagues were expected to spell out.

Lufthansa pledged that Vienna would grow in proportion to the group's other hubs, so that it was not disadvantaged in relation to locations like Munich or Zurich, the person said. Vienna's future as the airline's hub and operating centre was also secured for 10 years, they added. The Austrian government, which includes the Greens, required Austrian to halve its carbon emissions by 2030. The government will also introduce a tax of 30 euros on flights of up to 350 km (217 miles) for all airlines, as well as a minimum ticket price of 40 euros, the person said. ($1 = 0.8862 euros)