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Iberia Given Cabinet OK to Buy Lufthansa’s Viva Air Shares

September 14, 1990

MADRID, Spain (AP) _ The cabinet Friday authorized state-owned Iberia Airlines to buy the 48 percent stake in charter airline Viva Air currently held by West Germany’s Lufthansa.

The government said in a news release that the purchase by Iberia will raise the flag carrier’s control of shares in Vuelos Internacionales de Vacaciones SA (Viva Air) to 96 percent.

The purchase of Lufthansa’s stake for the equivalent of about $8.4 million will permit Iberia to transform Viva Air from a tourist charter carrier to a company with regular international flights to England, Germany and France, the release said.

Iberia and Lufthansa founded Viva Air in February 1988. Its original nominal share capital totaled about $17.5 million. Each airline took a 48 percent stake.

Other founding partners Infoleasing SA and West German tour operator A. Paukner are expected to retain their 2 percent interests.

The move is in step with other Iberia efforts to expand its European and intercontinental service.

Last July, an Iberia-led consortium agreed to buy 85 percent of Argentina’s state carrier Aerolineas Argentinas for $130 million in cash, $130 million in 10 installments and the retirement of $2 billion of Argentine foreign debt.

Aerolineas ownership transfer is set for Oct. 8, although it may be delayed.

Lufthansa officials last spring told Iberia they wanted to sell their Viva Air stake because of concerns tourist travel to Spain was declining and they wanted to focus on their expanding interests in Central Europe.

The Spanish Tourism Secretariat reported last Aug. 27 that 27.8 million tourists visited Spain through the first seven months of the year, down 2.6 percent from the same period a year earlier.

Iberia President Miguel Aguilo said Wednesday that Iberia planned to have Viva Air’s future flights cover travel on ″non-trunk″ international routes.

Aguilo said those were between smaller Spanish cities and major European cities and between smaller European cities and major Spanish cities - flights not always profitable for Iberia.

Viva Air owns five Boeing 737-300 aircraft, leases two DC-9 aircraft from Iberia and employs 145 people.

In its first full year of operations last year, Viva Air reported a profit of the equivalent of about $1.65 million on revenue of $75.2 million.

Last year Viva Air carried 808,603 passengers and logged 14,809 flight hours.

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