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Luxembourg in Talks to Sell Cargolux Stake After Qatar Buyout

Luxembourg’s government is in talks to sell a stake in Cargolux Airlines International SA after agreeing to buy out Qatar Airways Ltd. following a strategy dispute at Europe’s biggest freight-only airline.

“The Luxembourg government will negotiate with all interested parties,” Economy Minister Etienne Schneider told reporters in the European duchy today. Several entities have shown interest, he said.

The government said yesterday it struck an agreement over the weekend to pay $117.5 million for Qatar Air’s 35 percent stake, which the Doha-based carrier acquired in 2011 as part of plans to become a major freight operator by 2015.

A dispute between the airline and its Middle East stakeholder emerged on Nov. 30 when Cargolux Chairman Albert Wildgen stepped down after Qatar Chief Executive Officer Akbar Al Baker made what the carrier said were a series of demands that were hard to accept.

Volga-Dnepr Group, a Russian heavy-lift specialist, is one of the companies showing an interest in Cargolux and “Luxembourg would be open to a cooperation with a Russian investor,” Schneider said. Discussions have taken place at a government level as well as with Volga-Dnepr President Alexei Isaikin, he said.

Russian Deputy Prime Minister Dmitry Rogozin, speaking at the same Luxembourg event, said combining Cargolux and Volga-Dnepr “can only be a success.”

Early Stage

Negotiations with interested parties are at an early stage and have no deadline, Schneider said. The discussions will at first focus on “whether we can find a common strategy for the development of Cargolux”. Formal negotiations over price and capital increases will begin at a later date, he said.

Cargolux, the first operator of Boeing Co.’s 747-8 freighter, lost $18 million in 2011 as capacity exceeded demand, and has been unprofitable in three of the past four years. The results of a strategic review are due to be presented next month, Martine Scheuren, a Cargolux spokeswoman, said in an e-mail. Talks with unions to lower labor costs are set to resume Jan. 5, she said.

Stakeholders in Cargolux, which employs 1,500 people, include state-backed passenger carrier Luxair SA and local banks Societe Nationale de Credit et d’Investissement and Banque et Caisse d’Epargne de l’Etat.

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