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Styria rejects funding AUA's Graz - Vienna service

Styrian government leaders have said they are not considering subsidising struggling carrier Austrian Airlines (AUA) after the company warned its domestic flights service was at risk without public funding.

Styrian Social Democratic (SP�) Governor Franz Voves and provincial People�s Party (�VP) Financial Issues Councillor Christian Buchmann said today (Thurs) they had not changed their minds after a meeting with AUA co-chief Peter Malanik in Graz.

Voves claimed the former Austrian flagship airline�s Vienna � Graz route was one of its most profitable domestic connections.

"Around 116,000 passengers took an AUA flight in Graz to reach Vienna in 2008," the governor said, adding that statistics had shown Graz Airport had worked as an essential tributary airport for AUA connection flights.

Voves � whose party is seen neck-and-neck with the Styrian �VP as provincial elections are set to be held in autumn � said federal political leaders needed to fulfil any promises they had made as far as subsiding AUA was concerned.

AUA, which was founded in 1957, was saved from going bankrupt last September as German company Lufthansa acquired a major stake in the firm after the Austrian SP�-�VP government contributed 500 million Euros of taxpayers� money.

Voves claimed today he had appealed to the federal government during last year�s negotiations with Lufthansa to ensure the Vienna � Graz service would not be halted under consideration of the effects this would have on the Styrian economy.

Buchmann argued AUA � whose passenger numbers have drastically slumped for months � would benefit as a whole from offering a service between the federal capital and Graz since the provincial capital�s airport would serve the north-Slovenian area too.

Voves announced Malanik said the company might keep the service running with 80-seat planes instead of 50-seat jets and less connections.

The governor said further meetings would be held over the issue.

This comes just days after AUA said it would continue its Vienna � Klagenfurt route despite its call for subsidies going unheard.

Company co-chief Andreas Bierwirth and Carinthian Freedom Party (FPK) Governor Gerhard D�rfler said after a meeting on Wednesday that the service would not be halted.

D�rfler and Upper Austrian �VP Governor Josef P�hringer warned Vienna International Airport (VIA) would suffer most if AUA abandoned the service since passengers would travel using airports in Ljubljana, Slovenia, and Munich, Germany, instead.

Bierwirth said AUA were now working on an "optimisation concept" to ensure a further service between Klagenfurt and the federal capital � while it remains unclear whether services between Vienna and Innsbruck as well as between Vienna and Linz will continue.

Josef P�hringer already last year ruled out any subsidies. He said: "Financial support by the state of Upper Austria [for AUA] is out of the question."

"The world will not fall if AUA stops flying (between Linz and Vienna). People would use Munich Airport in such a case," he claimed.

Tyrolean �VP Governor G�nther Platter recently also rejected AUA�s public funding suggestions.

AUA officials announced after the takeover by Lufthansa it would be forced to establish a harsh cost-cutting regime to get back in the black.

Hundreds of employees, mostly ground staff and people working at its subsidiary Tyrolean, were sacked over the past few months, and hundreds more are set to follow throughout this year, according to reports.

Meanwhile Lufthansa has finalised the planned squeeze out of AUA minority shareholders today as shares were suspended from trading at the Vienna Stock Exchange (WBAG).

The German aviation giant had resolved to pay AUA�s remaining minority shareholders a squeeze out price of 0.50 Euros a share, excluding costs and provision � a price the company, despite shareholder protests, had deemed "appropriate" considering the poor financial condition of AUA, which had entered the WBAG in 1988.

AUA shares closed at 1.89 Euros yesterday, and the WBAG cancelled AUA's listing this afternoon.

Austrian Times

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