Could IAG And Etihad Be Looking To Invest In Austrian Airlines?

The Lufthansa Group is seeking government aid for all of its airlines. So far, only the Swiss airlines have been successful, with negotiations ongoing with Germany, Belgium, and Austria. One thing it has made clear is that it does not want governments involved in the running of its airlines. Could its competitors gazump the German aviation giant at the eleventh hour?

Austrian Airlines
IAG and Etihad are reportedly interested in investing in Austrian Airlines. Photo: Getty Images

Austrian Airlines being courted by IAG and Etihad?

The Lufthansa Group has made no big secret about its search for government aid. Already its airlines in Switzerland have secured funding, but only to be used for operations within the country. In Germany, the Lufthansa airline is reported to be seeking billions in government support and has even threatened to make itself bankrupt if the conditions of the aid on offer don’t align with its own operational strategy.

Both Austria and Belgium have indicated they would be willing to invest to save their airlines, but only if they don’t shrink. The Lufthansa Group has already indicated that most, if not all, of its airlines will come back from the crisis in a slimmed-down form, which doesn’t bode well for securing the much-needed state support.

Austrian Airlines, Flight Suspension, June
Austrian Airlines is looking for support, but without government strings attached. Photo: Florian Scmidt via Austrian Airlines

Now, according to Austrian Aviation, there seems to be an alternative on the table. The outlet reports that both IAG and Etihad Airways could be showing an interest in stepping in to help Austrian Airlines. Both are reported to have been in touch with the Austrian government to express their interest in investing in the carrier, which has come as something of a shock seeing as the airline has never indicated it is ‘for sale.’

Is Austrian for sale?

The Lufthansa Group has never indicated that it would be willing to divest any portion of Austrian Airlines to any investor, least of all to a competitor. However, if these airlines have indeed been talking to the state, it could indicate that they are merely wishing to show the Austrian government that there are other options open, aside from it sticking lots of money into the carrier itself.

German language publication Die Presse says that IAG, owner of British Airways, Iberia and Aer Lingus, among others, is ‘knocking on the door’ in Vienna. It claims the group wants to take care of the Vienna hub should the government-funded rescue of Austrian not work out. It states that Etihad is also interested, although it doesn’t explain to what extent.

IAG British Airways Cash
British Airways owner IAG is reported to be interested in investing. Photo: British Airways

Die Presse further says a meeting was held on Monday evening between Öbag, the Österreichische Bundes und Industriebeteiligungen GmbH – a state holding company and former investor in Austrian Airlines – and Austrian Airlines itself to discuss what Austria would receive in return for the proposed €267m investment in the airline.

Lufthansa has already made it clear that it does not want governments involved int eh running of its airlines. As such, it would make sense that the government would wish to explore other options available.

What would this mean for Vienna and for Austrian Airlines?

A foothold in Vienna would be incredibly beneficial for IAG. The group has long been looking for a way to expand in the east of Europe, and its LEVEL subsidiary, with a base in Vienna already, could be massively advanced with a new mainline carrier in the ranks.

Austrian Airlines
With a base in Vienna already, LEVEL could complement Austrian Airlines. Photo: Getty Images

Etihad’s involvement is somewhat more puzzling. However, with many of its long-haul aircraft not able to be used and reports that it’s touting around for a new investment, it wouldn’t be completely surprising to see it invest in Austrian. Perhaps it’s looking for a Qatar-Air Italy type of partnership to lease aircraft to and launch new long haul routes around the world?

While none of this is confirmed by either IAG or Etihad and talks set to continue behind closed doors, this remains little more than heresy and speculation at this stage. However, it’s an exciting prospect that could change the face of European aviation for good.

Would you like to see IAG involved in Austrian Airlines? What about Etihad? Let us know in the comments.