Eurowings to Sell Germanwings Unit to Lufthansa

FRANKFURT, Germany_Regional airline Eurowings said Monday it would sell its low-cost subsidiary Germanwings to Deutsche Lufthansa AG, though financial terms were not discussed.

Dortmund-based Eurowings said in a statement the transaction should become effective Jan. 1, 2009.

Lufthansa already holds a 49 percent stake in Eurowings.

With the sale, Eurowings can focus on its profile as a regional carrier and allows Germanwings to develop its low-cost model inside the Lufthansa group.

"Eurowings can now concentrate more on its core business," said Friedrich-Wilhelm Weitholz, the chief executive of Eurowings in the statement. He said the phase of successfully building Germanwings to the company it is today is finished.

The statement said Joachim Klein, currently the chief executive of Germanwings and a management board member of Eurowings, will step down from his the position at Germanwings once the transaction has been completed. He will remain on the Eurowings management board.

Germanwings operates a fleet of 19 Airbus A319s. In 2007, the company saw nearly 8 million passengers board its aircraft, achieving sales of euro630 million.

Germanwings flew its first flight October 27, 2002. The company was established to compete with the likes of Ryanair and Easyjet on the short and medium-haul European market. Germanwings' destinations include Reykjavik, Iceland; St. Petersburg, Russia, Malta, and Istanbul.

Eurowings currently has a fleet of 35 aircraft, 20 Bombardier CRJs and 15 British Aerospace aircraft. In 2007, Eurowings flew 2.7 million passengers.

Lufthansa on Friday agreed to buy the Austrian government's stake in ailing Austrian Airlines and offered to buy any outstanding shares.

The agreement signed by Lufthansa and officials of Austria's privatization agency gives Lufthansa the state's 41.56 percent share in its Austrian counterpart.

Shares of Lufthansa were up 6 percent at euro10.80 ($14) in Frankfurt afternoon trading.

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On the Net:

http://www.germanwings.com

http://www.eurowings.com

http://www.lufthansa.com