Al Jaber won't buy Austrian shares

Vienna: Saudi investor Mohammad Bin Eisa Al Jaber will not buy Austrian Airlines shares in the rights issue the carrier launched two weeks ago, a source with knowledge of the situation said on Monday.

The share issue is not related to the ongoing process of selling part of the Austrian government's stake in the airline, but was part of a deal earlier this year under which Al Jaber would have bought 20 per cent. The deal fell apart in May.

Though Al Jaber has made clear he does not feel bound by the agreement and would not buy the shares, Austrian Airlines went ahead with the share issue to honour its part of the deal and bolster its case in a legal wrangle with Al Jaber.

Some Austrian media reported last week that the airline's rising share price - at times last week it was above the 7.10 euros price of the share issue - might tempt Al Jaber to buy his stake anyway, and sell it on for a higher price.

Austrian Airlines shares were at 6.52 euros at 1001GMT yesterday, up 6 per cent for the day. They have more than tripled since hitting an all-time low in June.

Austrian Airlines and Al Jaber declined to comment on the rights issue. The subscription period ended earlier yesterday at 1000 GMT. Austrian said it would report the results on September 15.

Austria's government holding agency OeIAG last month started the process to sell a stake in the airline, which has attracted interest from carriers including Germany's Lufthansa, Russia's S7 and Air France-KLM.

Interested bidders will present their strategies for Austrian to OeIAG and its advisers Merrill Lynch this Friday.