Austrian Airlines Group

Austrian Air, Al Jaber at odds over investment plan

Austrian Airlines Group, owner of the country's largest carrier, said it's in talks with Saudi investor Mohamed bin Issa al Jaber after he threatened to cancel his plan to acquire a 20 percent stake through a capital increase.

The company received a letter from al Jaber's lawyers in which he said he wants to withdraw from the transaction, the Vienna Airport-based airline said today in a statement. The letter has no legal effect and is insufficient to terminate the deal, the airline said.

Profil magazine reported May 3 that al Jaber sent a letter complaining that he felt misled by Austrian Airlines management over its business outlook. The carrier posted a first-quarter loss of 60 million euros ($93 million). Its shareholders meeting is set to vote May 7 on the capital increase of about 150 million euros that al Jaber wants.

“The company resolutely rejects the allegations of intended misleading,” Austrian Airlines said, and “a withdrawal from the subscription agreement is not possible in that way.”

Austrian Airlines fell as much as 35 cents, or 8.5 percent, to 3.76 euros, the biggest drop since April 24, and was down 7.3 percent at 10:35 a.m. in Vienna trading. The stock has dropped 39 percent this year, valuing the company at 326 million euros.

“There is an overall feeling of uncertainty what will happen to Austrian Airlines,” said Martina Valenta, an analyst at Erste Bank in Vienna, who rates the company “reduce,” in a telephone interview today. “Something will definitely happen by Wednesday's shareholder meeting, but we will have to wait and see what exactly develops.”

(Published by Bloomberg 5, 2008)