Airline Merger

Since Air France-KLM and Russian carrier S7 did not submits offers conforming to the specifications of the bidding process, OeIAG said, it would now enter into exclusive "closing talks" with Lufthansa.

"I expect the signing of contracts within a month, so that the necessary decisions can be taken at the next OeIAG governing board meeting on December 5," OeIAG Chief Executive Peter Michaelis said.

Michaelis said he expected an agreement on the sale price and deal details to be finalized by the end of November, which would allow the holding company's executives to consider the proposal when they meet Dec. 5.

Lufthansa's reported demands that the Austrian government take over 500 million euros ($638 million) of AUA's debt of more than a billion euros is among the main issues to be negotiated before the takeover is final.

Lufthansa is offering only a nominal price for OeIAG's 41.6-percent stake -- just 0.01 euro per share or 360,000 euros in all, according to media reports.

Lufthansa refused to comment to the AFP news agency on OeIAG's decision Thursday.

Austrian Airlines is the most recent in a series of Lufhansa takeovers. The German carrier announced it would buy a majority stake in BMI and Eurowings in late October and a month earlier took a controlling stake in Brussels Airlines.