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Lufthansa wants to buy Swissair's stake in Austrian Airlines, according to Focus Money and a high-ranking Swissair official confirmed negotiations were underway between Lufthansa chief Juergen Weber and Swissair management.

Recall, Swissair holds 10% of Austrian Airlines, which, along with two other Austrian carriers Tyrolean Airways and Lauda Air, joined Lufthansa-led Star Alliance last month.

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The EU's complaints focus on a December 1999 cooperation agreement between the two airlines, which is linked to Austrian Airlines joining the Star Alliance -- whose members also include Scandinavian Airlines System and British Midland. The accord aims to create an integrated air traffic system based on close cooperation of commercial, marketing and operational activities.

"The parties have agreed to coordinate fares and schedules for all flights worldwide ... (which) includes reciprocal access to frequent flyer credits, code sharing, harmonization of service levels and integration of data processing," the commission said.

In addition, the airlines are setting up a joint venture that will share profits as well as losses, it added.

The Commission said the two airlines have a combined share of almost 100% of the air passenger market on 33 direct routes between Austria and Germany.


http://public.wsj.com/sn/y/SB989928297794179645.html

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The companies have two months to respond to the Commission concerns.

Lufthansa spokesman Georg Sahnen said the airlines were in a "constructive dialog" with the Commission.
http://news.airwise.com/stories/2001/05/989938784.html