Lufthansa has ended months of negotiations by finally taking full control of Austrian Airlines. The German carrier now holds more than 90% of shares in the troubled flag carrier after state-owned holding company.

The closure of the deal follows the European Commission giving Lufthansa the go-ahead to pay the Austrian state-owned company OIAG just €366,268 for its 41.6% holding of around 36,628,791 shares, or €0.01 per share.

Peter Michaelis, the head of Austria’s privatization agency, said at a press conference at Vienna airport: “Today marks the conclusion of the privatization of Austrian Airlines. It was unquestionably hard work but we can now say it was worth it - firstly for AUA but ultimately for Austria.”

Wolfgang Mayrhuber, Lufthansa’s chief executive, said he looked forward to working together with Austrian Airlines and addressed the struggling carrier’s financial difficulties that will cost many employees their jobs.

He told AP: “AUA doesn’t have a product problem, it has a cost problem”.

In July AUA announced plans to cut about 1,000 jobs by mid-2010 as part of an effort to boost its competitiveness. It may also have to cut a further 500 of its 7,300 jobs, according to the Austria Press Agency reported. It said the airline planned to announce further details in October.

Under the deal, Austrian will keep its name and red and white livery.

Peter Malanik of AUA said: “This is an incredibly important day for our company. The phase of uncertainty has ended well.”

In 2008, 10.7 million passengers flew with the Austrian Airlines Group to 120 different destinations. Austrian Airlines currently operates a fleet of 91 aircraft.

Thursday’s closing symbolized the latest step in Lufthansa’s consolidation of the airline industry. In June, it won European Union approval of its acquisition of a stake in Brussels Airlines. Last year, it bought 80 percent of BMI British Midland - giving it a much greater presence at London’s Heathrow Airport.