Lufthansa eyes European deals after JetBlue: CEO

By Andreas Moeser

FRANKFURT (Reuters) - Lufthansa (LHAG.DE) remains on the lookout for acquisitions in Europe after it agreed to buy a stake in U.S. low-cost carrier JetBlue Airways (JBLU.O), the German airline's chief executive said on Friday.

The two companies said on Thursday that Lufthansa would buy a 19 percent stake in JetBlue for about $300 million. The deal marks the first major investment by a European carrier in a U.S. point-to-point airline.

"It is a financial transaction of high strategic importance," Lufthansa CEO Wolfgang Mayrhuber told a news conference in Frankfurt.

However, Europe remains the most important region for future acquisitions by the German flag carrier, he said, adding: "It's not a question of either or." He did not elaborate.

Last week, Lufthansa decided not to bid for loss-making Italian airline Alitalia AZPIa.MI. Mayrhuber reiterated this week that Lufthansa is interested in Spain's Iberia (IBLA.MC) but that the price is too high.

"Lufthansa demonstrates once again its stringent financial criteria and its policy to avoid any major risks," Sal. Oppenheim said in a note, commenting on the JetBlue deal.

Lufthansa ranks No. 2 among European carriers by traffic, behind Air France-KLM (AIRF.PA) and ahead of British Airways (BAY.L).

At 8:40 a.m. EST, Lufthansa's shares were down 0.9 percent at 18.19 euros. Air France-KLM fell 1 percent and shares in British Airways dropped 1.2 percent.

The DJ STOXX European travel and leisure index .SXTP, which includes airlines, was 0.2 percent lower.

REGULATORY APPROVAL

The JetBlue deal, which requires approval from U.S. regulators, is expected to close in the first quarter of 2008.

U.S. law currently caps foreign ownership of U.S. airlines at 25 percent.

"The move will give Lufthansa a first foothold and more insights into the U.S. market," Sal. Oppenheim said.

Andrew Light, an analyst at Citigroup, said the rationale appeared to be "an opportunistic investment for the long term."

A loyal, largely New York-based customer following, plane orders and options with Airbus at attractive prices and runway slots and a terminal at the increasingly congested JFK airport in New York were among the U.S. carrier's main assets, he said.