Vienna - Flag carrier Austrian Airlines (AUA) extended a last deadline to a key Saudi investor until May 21 on Tuesday, but both parties clearly regarded the planned
150-million-euro (232- million-dollar) deal as off.

Talks with Saudi investor Mohamed bin Issa al-Jaber to acquire a 20 per-cent stake in the ailing airline broke down, due to "impossible conditions" set by al-Jaber, Austrian and its main shareholder OIAG, Austria's privatization holding, confirmed.

Al-Jaber, who claimed he was misinformed about the airline's bad performance, concluded the deal in April, shortly before the share price dropped from 8.10 euros to 4.20 euros as AUA reported 60.4 million euros net losses for the first quarter.

Al-Jaber wanted to further increase his share, but on basis of the current, significantly lower, share price, Austrian media said.

Austrian's management and OIAG were responsible for his pulling out of the deal, which had been designed to shore up the airline and preserve its independence, al-Jaber said.

There was no transparency or honest dealings with a potential investor, he said, adding that contrary to OIAG's claims of ongoing talks, he was informed by the media that the deal was off.

"It seems that OIAG is not interested in our investment and in maintaining AUA's independence," he said.

AUA CEO Alfred Oetsch told Austrian public radio that he regarded al-Jaber's obligations still as valid, but did not expect the deal to go through.

The airline was planning to go ahead with its expansion plans in the Middle East with or without the Saudi businessman, Oetsch said.

If none of the two sides gives in, as is widely expected, Austrian seems willing to give up its long-standing opposition to taking a strategic partner on board.

Austria's Transport Minister Werner Faymann however voiced strong opposition against the most likely candidate, Germany's Lufthansa. A partnership would endanger Austria's business position.

The airline on Tuesday raised its fuel the second time since March, citing record kerosene prices. Surcharges for short-distance flights are up by 23.5 per cent to 21 euros and by 6.5 per cent to 82 euros for long-distance flights. (dpa)