Saudi billionaire slaps Austrian airline with lawsuit

LEGAL BATTLE: Al Jaber is suing the head of AUA as both sides harden their positions in the increasingly bitter legal battle. (AFP)

Saudi billionaire Mohamed Al Jaber is suing the head of Austrian Airlines (AUA) as both sides harden their positions in an increasingly bitter legal battle, Austrian news agency APA reported Friday.

"We're drawing up a criminal complaint against [Alfred Oetsch] personally, which we expect to file in the coming weeks," APA quoted Al Jaber's lawyer Bettina Knoetzl as saying.

Relations between the Austrian flag carrier and its one-time suitor, Al Jaber, have been deteriorating ever since the billionaire investor decided to pull out an agreement to buy a 20 percent stake in AUA.

Last month, the airline filed a suit against Al Jaber to force him to meet the guarantees written into the contract that was to have given him a 20 percent stake in AUA but which he abandoned in May.

Al Jaber, who has Austrian citizenship, owns three of Vienna's most luxurious hotels and is estimated to be worth some 3.4 billion euros ($5.3 billion), promptly responded with a countersuit of his own to block the airline's claim and also a claim for compensation.

Al Jaber had agreed on March 10 to buy a 20 percent stake in AUA in return for putting up 150 million euros of fresh capital.

With his money, AUA hoped to press ahead with its planned expansion in the near and Middle East.

But on April 24, AUA announced that tougher competition and high kerosene prices had driven it back into a first-quarter loss in the first three months of this year.

The news sent the group's shares into a nosedive on the stock exchange and it was then that Al Jaber started to get cold feet.

He claimed management had "intentionally misled" him about the state of the company's finances, meaning the 7.10-euro-per-share price tag he was paying was much higher than AUA's shares were worth.

The Austrian government is now on the look-out for a strategic partner for AUA, which warned that high kerosene costs would push it into a full-year loss of 70-90 million euros this year.

Finance Minister Wilhelm Molterer said in June that a stand-alone solution was "becoming less likely".

Rival airlines such as Lufthansa and Air France-KLM have been mooted as potential partners for AUA.

Management is examining ways to boost earnings potential under its own strength and/or with potential strategic partners.

A recommended course of action is expected by the end of September.

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