Lufthansa Austrian Airlines Takeover Essay Example for Free

Lufthansa Austrian Airlines Takeover Essay Taking a brief look on the economic development in Europe up to the year 2008 reveals high GDP growth rates and reminds us about the times of prosperity that we almost all so nostalgically recall. But Austrian Airlines have never seen any boom in revenues, profits and the number of transported passengers. This alone is a reason for big concern as airlines have never been a counter-cyclical business. If the company is unable to sustain itself in the times of prosperity what loss will they carry in the books in the times of economic downswing? Finding a powerful strategic partner seems like inevitable for the Austrian company. In 2008 Austrian Airlines was the 11th biggest airlines in Europe with 10,7 million passengers and 2,5â‚ ¬ billion in revenues. On the other side Lufthansa has 7 times more passengers and makes 10 times more money in revenues. Putting these two categories into relation shows how company? s size creates numerous benefits, particularly financial ones. In 2008 Austrian Airlines had revenue of 233â‚ ¬ per passenger while Lufthansa attained 357â‚ ¬ per passenger. Now it is obvious how size matters and that synergies create great cost-cutting potential and increase profitability. If Lufthansa manages to bring Austrian Airlines to its own level of profitability they would have EBIT of 140â‚ ¬ million if the expenses and passenger number stay on 2008 levels. Not to mention the strategic benefits of this acquisition, and probable Lufthansa? s ability to make use of synergy effects i. e. to cut costs and sell even more flight tickets thanks to wide-spread sales offices all over the world. Acquiring Austrian Airlines proves as lucrative for a Lufthansa if they transform the company and as a good deal for current shareholders who can count on even more losses if Austrian Airlines decide to pursue stand-alone strategy which means that they will eventually lose all the capital they put up . This simple analysis show why did consolidation wave in airlines industry pick up on speed. It really seems that main task for carriers is to get big as fast as they can or to face with a demise of their business. Immediate recapitalization of Austrian Airlines in the amount of 500â‚ ¬ million just supports above statement as even the biggest European airline would be unable to cover such a huge accumulated loss if it weren? t for the help of the Austrian government and the European Union. Lufthansa plans to take advantage of the Austrian Airlines? geographic location and their know-how and expertise in CEE and Middle East. After the fall of communism in Europe Austria has played a crucial role as a gateway to Eastern and Southeastern Europe. Austrian Airlines took its business one step further and established new core market in the Middle East. For an international company like Lufthansa Austrian Airlines represents a cornerstone in the expansion towards Middle Eastern and Asian markets. Austrian Airlines is a first mover in CEE and Middle East and a market leader with 61 destinations in the region whose expertise in the Eastern markets will be of a great use ones Lufthansa decides to go East more aggressively as Austrian Airlines will share their core competence with the group. Cutting overlapping flights and optimization of its joint offer and sales activities will improve Austrian Airlines business activity right away. Further developing of Austrian? s successful hub system at Vienna airport will also bring positive effects in the long run. Since Lufthansa and Austrian Airlines are old partners within the framework of the Star Alliance and they know each other very well integration in the Lufthansa Group should play out without major obstacles. Companies cooperated within the context of a bilateral joint venture for Austrian-German flight traffic as well as in the important foreign markets of Switzerland and Brussels. Even their technical services have been cooperating closely and that is also one of the reasons why Austrian executives have trust in Lufthansa and why did they choose exactly Lufthansa among 12 initial bidders. Companies expect to be able to exploit extensive synergies and assess these to amount to 40â‚ ¬ million in cost savings and additional revenues. Apart from all this, Lufthansa has assured Austrian Airlines that they will be granted extensive autonomy within the group and that they will preserve their Austrian identity which stands for quality and Austrian hospitality. Vienna will remain the hub of all flight operations, so that Austria will continue to feature very good international flight connections. Its central position in the heart of Europe made it easier for Lufthansa to grant them autonomy. No major downsizing of the fleet is planned which would be unthinkable if they wanted to pursue stand-alone strategy. On an organizational level, Austrian Airlines will operate as a profit center within the Lufthansa Group what represents a great incentive to get out of the red once and for all. As a part of Lufthansa Group Austrian Airlines will easier protect its position on the market if the recession hits the economy in 2009 because smaller carriers which are not supported by a strong corporate parent will struggle with insufficient resources and declining passenger numbers. As it will soon become apparent, Austrian Airlines shareholders, especially Republic of Austria, will sign a great deal if transaction proceeds. Keeping independence among the group, operating under its distinguishing identity while improving quality and profitability of its services sounds almost incredible for the company which could declare bankruptcy if it weren? t for its strategic partner. Considering current situation both sides could profit from the transaction. Moreover, the integration in the Lufthansa Group will provide Austrian Airlines with access to new passenger flows and enable them to more effectively build up international brand awareness and be Austrian ambassador all over the world which will strengthen their business model. Lufthansa? s worldwide presence, their size, lobbying power and relationship with gasoline sellers will be of great help to Austrian Airlines. In the light of the bleak economic prospect for 2009 Austrian Airlines can focus on their core business knowing that Lufthansa watches their back. This strategy could work well as Austrian Airlines received numerous awards in 2008 including the so-called â€Å"Oscars† of the industry and a first place ranking as the best airline in Europe according to a survey carried out by â€Å"Capital† magazine. Austrian Airlines have a reliability rate of over 99. % and is among top five most punctual carriers in Europe and could improve Lufthansa? s business model too by sharing their expertise. A fully restructured Austrian Airlines will be forced to become a thriving member of the Lufthansa Group once the company is aware that the Republic of Austria will not back them up if anything goes down the drain. Concerning a history of mutual cooperation between Lufthansa and Austrian Airlines executives in charge need to be particularly careful to avoid accusations of conflicting self-interest as these may arise due to close ties between two companies. Since there were 11 other bidders at the start and Lufthansa was chosen in the end both parties need to be adequately informed about all facts relevant to this transaction so that they can clearly explain why is this transaction undisputedly the best possible solution for both sides. Considering that Lufthansa is taking over a company which made huge losses in the past years and whose balance sheet reveals equity ratio of just 11% (which is appalling even for a bank) strategic rationale needs to be explained clearly and concisely together with all future advantages because otherwise someone could think acquisition is completely irrational. Even after the restructuring aid Austrian Airlines will remain highly indebted and Lufthansa? s executives have to justify their reasoning by outlining benefits. Transaction Overview After signing initial agreements (CA;LOI) which provide a foundation for any further steps, Framework Agreement is often cited in the underlying Voluntary Public Offer. Basic arrangements between parties should be outlined in the letter of intent and then once more stipulated in the Framework Agreement. The underlying Voluntary Public Takeover offer stipulates conditions precedent which are to be fulfilled before closing. From that reason they all represent potential deal-breakers since there is a possibility that some of them will not be fulfilled. According to Framework Agreement an extraordinary shareholders meeting will be called just before the closing of the Share Purchase Agreement so that recapitalization can be authorized, new supervisory board appointed and articles of association amended. In order to mitigate any negative impact of information leakage on the transaction Lufthansa and Austrian Airlines had signed a confidentiality agreement. Both parties are obliged to use confidential information just for the purposes of the ongoing transaction and will not disclose any information to the third parties in order not to bring any company in an unfavorable position. Letter of intent is a second important document signed which outlines Lufthansa? intentions and give an overview of the basic transaction, purchase price, determines break-up fee and division of costs incurred as well as court under which jurisdiction any disputes will be solved. For Lufthansa it is of extreme importance to include an exclusive dealing clause so that Austrian Airlines obliges to negotiate just with Lufthansa and no one else at the time. Since Lufthansa plans to take over a company in an extremely bad shape it would be inappropriate of Austrian Airlines not to bring in all their energy and foc us to close the deal. Letter of intention needs to include details about a stake purchase and subsequent mandatory public offer. The details of the purchase price (maximum 4,49â‚ ¬ per share) should also be included i. e. the price paid for the 41,56 % of shares held by Osterreichische Industrieholding AG which includes the details on the earn-out option (under which conditions will Lufthansa pay an amount of up to 162â‚ ¬ million depending on Austrian Airlines? future economic performance and on the outperformance of the Lufthansa? s share price). It should also stipulate the conditions of the offer given to a minor shareholders so that Lufthansa holds at least 75% of the permanent voting shares (without consideration of the treasury shares) in Austrian Airlines after the end of the initial acceptance period. Lufhansa? s intention to fully take over Austrian Airlines should be clearly pointed out particularly their wish to acquire 90% of all shares so that they can launch a squeeze-out. The important conditions precedent should be included in the Letter of Intent. Approval by the competent antitrust authorities in the European Union and other countries should be right away designated as â€Å"conditio sine qua non†. Approval of the restructuring aid is also deemed as extremely important and it should be stipulated in the Letter of Intent as 500â‚ ¬ million granted by the state of Austria and the European Union are absolutely necessary to compensate for the negative shareholder value of Austrian Airlines and make Lufthansa willing to take them over. Recapitalization will also further dilute the free float shareholders making it easier for Lufthansa to launch a squeeze-out procedure. Letter of intent should also arrange who bears the break-up cost in the case of a regulatory disapproval. This is seen as one of the major risk since Lufthansa and Austrian Airlines partly operate the same lines and consolidation would lead to a further concentration of power. Considering negative financial results of the Austrian Airlines letter of intent should already include frame of the future executive structure while definitive agreement should include exact top-management structure in the Austrian Airlines which will facilitate integration in the Lufthansa group and turn around the profitability. Since Shareholders Agreement of Austrian Airlines syndicate had already dealt with issue it might be a bit cumbersome renegotiating it. Letter of intent should also state that Lufthansa has no intention whatsoever to dismantle Austrian Airlines i. e. that brand, headquarters and route network favoring Austrian national interests will be kept. Lufthansa should try to avoid the matter of employment until the very end (final agreement) so that they are not bound by pre-signed clauses once they negotiate the final contract because restructuring of the Austrian Airlines is necessary by all means. Considering that Lufthansa is the biggest European airline company it the approval of antitrust authorities will not come smoothly. Second condition precedent, approval of 500â‚ ¬ million is not deemed as problematic as this pay-out coincides with Austrian national interests to preserve a national carrier which serves its interest. (Besides it wouldn? t make almost any sense for the European Union to grant the acquisition but rejects the aid. ) Acquiring Austrian Airlines will only increase Lufthansa? s size and market power. Holding such a dominant position could incite abusing it e. g. by charging unfair prices or refusing to innovate. This horizontal agreement will put competition in an unfavorable position but on the other hand Lufthansa can argue that consolidation in the European airline industry is inevitable. However, only consolidation will ensure survival of the European airlines in the long run, fragmented market structure leaves them susceptible to either bankruptcy or takeover by Asian od American airlines who are fortunately by law not allowed to be major shareholders. Since regulation is the real obstacle to consolidation alliances in Europe prevail. Unfavorable circumstance is also the fact that at the time of this pending transaction Lufthansa bought a big chunk of Brussels Air. The regulators will certainly not like that. Like in any deal representations and warranties play an important role as they typically make up the largest part of the share purchase agreement. They have an informational, protective and supportive role in the transaction . Austrian Airline? epresentations and warranties, coupled with the Lufthansa’s due diligence, enable Lufthansa to learn as much as possible about the business prior to signing the definitive acquisition agreement. Second, they are protective. This is crucial for Lufthansa who acquires highly indebted company which value without restructuring aid is negative. The seller’s representations and warranties provide mechanism for the Lufthansa to step back or possibly to renegotiate the terms of ac quisition. The second major feature of merger the agreement is the inclusion of various pre-closing covenants, or promises to do something or not do something during the period between the signing of the acquisition agreement and the closing. Generally, covenants should be absolute and Lufthansa? s goal is that none material changes take place until the closing and that business condition does not aggravate in any respect because if such events took place it would mean that they overpaid. The reasoning behind the indemnification is the same. One should emphasize the importance of reps and warranties relating to financial statements (compliance with accounting standards) , taxes and employees (manager contracts, severance terms and compensations) and no pending litigations which breech would surely threaten the envisaged transaction. The role of all above named provisions is risk minimization and these provision should also act as an incentive for a fair dealing.

The Middle Ages Essay -- History Historical Middle Ages Essays

The Middle Ages Throughout time, history has taken some strange turns. A single ruler establishing some new form of government can transform entire civilizations, or a single event can lead to the creation of a great new people. Whatever the case, history can repeat itself in time. One possible exemption of this could be Britain’s time period of the Middle Ages. Bearing a distinct and unique culture relative to the time period, some of the values and the customs held during this time have yet to be repeated in history. It is perhaps the most unique period of all time for the British Isles. Brief History   Ã‚  Ã‚  Ã‚  Ã‚  Before the period of the middle ages, the British Isles mostly lay dormant in local disputes and settlements of small tribes. Up until the late 900’s, the Anglos and the Saxons laid their claim to the land of Britain. However, this all soon changed. An ambitions individual with hero-like characteristics set foot and conquered the Anglo-Saxons and started Britain on its journey to modernism. Thus, the tide was set in motion for a new government and a civilized race. A monarchy was established, and the Middle ages began in roughly 975 AD (Vinogradoff, p 18). Feudal Life   Ã‚  Ã‚  Ã‚  Ã‚  In the Medieval Period, life was either very great or very bad, according to your class. Only 2 classes existed during this time: the nobles, such as kings and knights who lived inside the castle, or the peasants, such as working-class people who lived in often unspeakable conditions. The peasants treated the nobles with the utmost respect, for if they didn’t, then the nobles could have them beheaded. (Sanders, p 34). The nobles were almost always the ones who owned land, and the peasants worked on this land in exchange for a small portion of it, in a sense, rented out in exchange for the labor. Peasants often worked 16-hour days as long as they could see into the nighttime and got very bad nourishment. The noble was not interested in the health of the peasants working on his land, as there was a significant supply of others who were very willing to take his or her place.   Ã‚  Ã‚  Ã‚  Ã‚  Women had a very difficult position in society during the Middle Ages. The feudal age was known for its superstitions, and women were often convicted of witchcraft and burned at the stake. Some of the more lucky women held professions of there own, such as blacksmiths, carpenters, and apothecaries.... ...een defined. Juggling became a popular form of entertainment, as it was unpredictable and seemingly deadly objects could produce awe and inspiration to the audience. Drama also played a big role during this time period, and plays were acted out only by males and only for the noble class. (McCarthy, para. 3).   Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚  Ã‚  Perhaps the greatest and most unique time period of all time for the British Isles was the Middle Ages. The feudal system and the role of the monarchy led this seemingly boring piece of time on the path towards greatness in meaning and value. Social skills developed during this time to force humans to cooperate and work together to produce a lifestyle that was beneficial to everyone and not just a leader. Lessons have been learned from this time period, such that it is not perfect. Disputes inside a community cannot be solved easily because they often affect the whole community and there will only be one side. Perhaps there are more lessons to be learned from this time. One can only hope that the future of modern warfare could be secretly embedded in the time of the middle ages. History has a tendency to repeat itself; maybe the time has come for the middle ages.

Pros and Cons using oil

Pros and Cons of using oil I want to talk about advantages and disadvantages of using oil in our world, people can use it for different reasons. We use oil for cars, airplanes etc. In some countries it is very expensive but in other countries it is much more cheaper because today its harder to find that's why its more expensive and may not be much left. Oil is very useful. For example, we can use it as an ingredient for our meal but also it used to accelerate the cars and how we also know doctors use oil in many medical reasons.I think advantages of using oil is that people can use it for different reason. People use oil for military reasons too. There are a lot of ways using oil. A lot of people now travel with plane, they couldn't travel if there wasn't oil. In war oil is used more because soldiers need to drive planes and cars and attack another country. People use oil to heat their houses. People use oil to get energy from it. When country is rich of oil its economy should be ve ry good. Because other countries buy oil from them. In big wars such as WWW andWWW oil was the main thing that was needed to win the war. And the countries who started the war they wanted to capture the places where there is a lot of oil. Nowadays oil is very useful. In some places oil Is very expensive because they don't produce oil but they buy it from other countries and they sell it expensive. But some countries sell oil much more cheaper because they produce oil in their countries. Disadvantages of using oil are that it makes pollution and a lot of people die because of that. People have used oil for centuries but using it made pollution. Pole used fuel smokes to kill another people. Usually they used It In wars. Burning oil produce carbon dioxide and It causes global warming. Passing near a car that brings out smoke,one starts to caught because the carbon dioxide that Is released from the car Is going to ones kings and It can result with serious problems to ones health. And us ed OLL Is hard to recycle and a lot of factories produce carbon monoxide by giving it out to the air. People start to breath with this air. I think In our time Oil Is very useful because without OLL we can not survive.People can not use electronically devices or we can not move without cars or planes. We would need more time to go to some places without planes. But It would be better because there would not be pollution and people could live longer. In some places oil is very expensive because they don't produce oil but they buy it from other countries and they sell it expensive. But pollution. People used fuel smokes to kill another people. Usually they used it in wars. Burning oil produce carbon dioxide and it causes global warming.Passing near a car that brings out smoke,one starts to caught because the carbon dioxide that is released from the car is going to ones kings and it can result with serious problems to ones health. And used oil is hard to recycle and a lot of factories produce carbon monoxide by giving it out to the air. People start to breath with this air. I think in our time Oil is very useful because without oil we can not survive. People can not use time to go to some places without planes. But it would be better because there would

The Safety of Using Anabolic Steroids Essay example

The Safety of Using Anabolic Steroids Even if you didnt have any or little knowledge of steroids and were asked this question, you would probably answer no. Why? Would it be because a high school kid somewhere in California died from taking them? Or would it be because you read it in Readers Digest? Many people think you are selling your soul to the devil when you take steroids. There is an incredible amount of myths, misinformation, and misconceptions about anabolic steroid use and their dangers. Although there are risks, most people are misinterpreting them. One of the biggest misconceptions about steroids is that it is a magic pill. A magic pill that will transform a 130 pound weakling into the hulk in a month.†¦show more content†¦These sites include muscle, hair, sebaceous glands, endocrine gland, and the brain. Side effects unfortunately come with the use of anabolic steroids. Side effects vary with the person and sometimes dont occur, however there are common ones. Most side effects come from ste roids that are more androgenic than anabolic so they can very depending on the drug. Androgenic is the precursor of the male characteristics of muscle size and strength, deeper voices, body hair, sex drive, and aggressiveness. Another side effect is gynocemastia. Gynecomastia is also referred to as bitch tits. This is the abnormal breast like tissue, which can develop in males using large doses of steroids. This is also naturally occurring in some men. Gynecomastia develops from testosterone aromatizing in the body and converting to estrogen. Estrogen is the naturally hormone produced in the female body. It is the hormone responsible for female secondary sexual characteristics. Aromatizing occurs when testosterone passes through the bloodstream and doesnt attach themselves to the corresponding receptors. The testosterone that is left over has to pass through the bloodstream a second time and converts to estrogen. The estrogen then collects to the mammary glands, which are located in the nipple area of a mans chest to form deposits. They will eventually start to resemble womans breast. Shrinking of theShow MoreRelatedUse of Steroids by Athletes Essay1538 Words   |  7 Pagessports regulating bodies such as the International Olympic Committee have banned certain performance-enhancing substances because of safety and fair play issues. However, many athletes feel that they have to use steroids to be competitive in the international sporting arena. Athletes believe that everyone else is using these products, and thus anyone who does not use steroids is putting himself or herself at a disadvantage. This dichotomy between athletes and regulating bodies represents the major controversyRead More Steroids and Sports Essay1324 Words   |  6 PagesSteroids and Sports Steroids, ever since their introduction into the sports world five decades ago, they have been a controversial issue (WebMD medical news). Anabolic performance dates as far back as the original Olympic Games. Today walking into any gym you will find some one who is using steroids or some kind of enhancement supplement. Anabolic steroids are so popular with athletes from high School level all the way up to the top. For the past fifty years, athletes around the world use steroidsRead MoreBenefits Of Using Creatine And Anabolic Steroids Essay906 Words   |  4 Pageseffects of another performance enhancing substance. The most used performance enhancing supplements are creatine and anabolic steroids. Creatine is a naturally occurring compound that is produced from amino acids by the kidneys and liver. It is also found in foods such as poultry, fish and meat. Creatine monohydrate is produced commercially for use as a supplement. There are benefits of using creatine as a performance enhancing supplement which include; supplying energy to muscles, delay fatigue duringRead MoreAnabolic Steroid Is A Synthetic Hormone That Resembles1694 Words   |  7 PagesAnabolic steroid is a synthetic hormone that resembles testosterone in promoting the growth of muscle. Such hormones are used medicinally to treat some forms of weight loss and illegally by some athletes and others to enhance physical performance, Anabolic refers to muscle-building, and steroids refers to a large group of chemical substances classified by a specific carbon structure. Since their creation in the early 1930’s, steroids have been praised for their effectiveness by users, debated overRead More Steroids In Sport Essay695 Words   |  3 Pageseveryday to perfect their game.Then there are those who take an alternative route. Now athletes are taking performance enhancers such as creatine, androstenedione and worst of all, anabolic steroids.Steroids are chemicals that act like hormones (substances in your body that regulate bodily functions). Anabolic steroids are the ones that are abused to build muscle mass or to make your workout longer. They are chemicals of artificial testosterone, which is a male hormone. With higher testosteroneRead MoreShould Steroids Be Illegal For Athletes?900 Words   |  4 Pagesâ€Å"If steroids are illegal for athletes, then why isn’t photoshop illegal for models?†. Documented steroid usage has increased significantly over the past decade, however this paper contends that with the help of medical research, medical surveys and first hand experience, I will demonstrate steroids are not as hazardous as the general public perceives steroids to be. As steroid use continues to be identified in the news, a growing trend in America and all over the world right now seems to be askingRead MoreThe Effects Of Steroids On The Human Body, Steroids Sports, And Reasons Why People Use Steroids1251 Words   |  6 PagesJared Hipsher Mrs. Sexton 3-26-15 English 10 Steroids Jared Hipsher 3-26-2015 English 10 Mrs. Sexton Steroids Thesis : The history of steroids, the affects of steroids on the human body, steroids in sports, and reasons why people use steroids, are all things I ve wanted to know for a long time now I am going to further my knowledge on this topic. Introduction About A. Types 1. Anabolic 2. Corticosteroids III. History A. 1954 1. Weight liftingRead MoreThe Use of Performance Drugs in Sports Essay1024 Words   |  5 Pagesdoing drugs and its ruining their health and life. Also, if some teenagers take performance drugs they are making them better than everyone else giving themselves an advantage over everyone else which is cheating, so why should they get money for using drugs to win, how do we know they arent actually good at the sport? Performance drugs in sport should not be tolerated and should be illegal. Stores shouldnt give teenagers drugs that way they can do well in a sport. Many student athletes want toRead MoreIn The August 8Th And 15Th Issue Of The New Yorker, Mark1463 Words   |  6 Pagestourist rates come with the risk of injuries or infection. The Zika virus was one that many was not sure how to control and keep the safety of everyone first. The Zika virus is spread through infected mosquitos, pregnant mothers which can cause defects on certain births. Zika virus is related to yellow fev er, Japanese encephalitis and West Nile. With much of humanities safety as state the Olympic committee were up to a challenge. Despite the problem at the games, this virus has taken the lives of manyRead MoreAnabolic Steroids And Substance Steroids1814 Words   |  8 PagesMerriam-Webster Dictionary anabolic steroids are any of a group of usually synthetic hormones that are derivatives of testosterone, are used medically specially to promote tissue growth, and are sometimes abused by athletes to increase the size and strength of their muscles and improve endurance. The main purpose of anabolic steroids is to gain strength and muscle very quickly and faster than any other drug enhancement. There are many types of models that relate to anabolic steroids. One model is high school