Vienna  - Austrian Airlines AG will receive up to 500 million euros (625 million dollars) from its public owner after closing a deal to privatize the ailing flag carrier, the Austrian government decided Wednesday.

Deutsche Lufthansa AG and Russian domestic carrier S7 Airlines have both submitted bids for the 42.75-per-cent stake that is currently held by Austria's state holding OeIAG.

However, S7 announced Wednesday that its offer was non-binding.

Both suitors have let it be known that they expected Austria to shoulder some of Austrian Airline's debt of around 900 million euros, but the government decision left it open if OeIAG was to take over debt, raise capital, or inject state funds in order to sweeten the takeover deal, the Austrian news agency APA reported.

Lufthansa CEO Wolfgang Mayrhuber said Wednesday his company could help the Austrian airline to increase sales. The German carrier also announced it would acquire British airline BMI and German airline Eurowings.

On behalf of S7, Vienna-based law firm Karasek Wietrzyk said in a statement that its client had only submitted an "analysis of the current situation by S7, based on which S7 would be ready for further negotiations with OeIAG."

Austrian Airlines reported Tuesday it lost 16.4 million euros in the third quarter, down from a profit of 29.2 million euros in the same period last year.

Under pressure from high fuel prices, competition from budget carriers and slow business on long-distance routes, the airline expects to end the year with a deficit of up to
125 million euros. (dpa)