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Lufthansa Signs Letter to Buy East German Interflug

March 8, 1990

FRANKFURT, West Germany (AP) _ The West Germany airline Lufthansa has tentatively agreed to buy a 26 percent share of Interflug, East Germany’s state-owned carrier, a Lufthansa spokesman said.

The agreement is similar to those signed by many West German companies who want to acquire partners over the border since East Germany ousted its hard- line Communist leaders in October.

The two airlines reached a preliminary agreement earlier this week, but details are still being worked out, the Lufthansa spokesman said Wednesday, speaking on condition of anonymity.

He said Lufthansa has signed a letter of intent to make the purchase, but did not say how much it would pay.

The spokesman said closer links with Interflug does not mean a merger is planned with the wealthy West German carrier, which is 51 percent controlled by the state. The letter of intent specifically allows Interflug to develop new routes on its own and the East German company’s employees will be guaranteed their jobs, he said.

East Germany’s Communist-led interim government has been moving to open up its economy and make it more compatible with its powerful capitalist neighbor’s, but a full foreign investment code has not been fixed.

The airlines have been negotiating closer cooperation since last fall. They already have agreed to work together in several areas including booking systems, pilot training, airline catering and charter flights.

A spokeswoman at the East German Transport Ministry said this week that no final accords can be signed with Lufthansa until Interflug workers vote next week on whether they want cooperation with the Western airline.

News reports have suggested Interflug might lease 17 Boeings 737-200s from Lufthansa in 1992 as the West German carrier phases in newer planes.

Although strapped for capital, the East German company has also expressed interest in buying jets from Airbus Industrie S.A., a European consortium, to replace its aging Soviet-built fleet.

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