The state capital of Klagenfurt faces a far-reaching decision regarding its future role as a shareholder in Klagenfurt Airport. In light of an upcoming capital increase totaling €11,8 million, initiated by the Carinthian Investment Management (K-BV), the city is confronted with the need to raise approximately €2,3 million in the short term to maintain its 20 percent stake.
Against the backdrop of a strained budget, the People's Party has now presented an alternative plan that envisions transferring the shares to the state of Carinthia. This proposal stipulates that the city, in exchange for a land transfer tax of approximately €500.000, would withdraw from its active financing obligations, while simultaneously securing a 20 percent share of the profits from future land sales. This is intended to minimize the financial risk to the city's budget without foregoing the long-term revenue potential of the valuable airport land.
Financial constraints and the need for a capital increase
Klagenfurt Airport has been undergoing restructuring for some time. Following the withdrawal of investor Franz Peter Orasch and his Lilihill Group as majority shareholders after the State of Carinthia exercised its call option, responsibility for operations and necessary investments has largely reverted to public ownership. The Carinthian Investment Management Company currently holds 80 percent of the shares, while the City of Klagenfurt retains the remaining 20 percent. A substantial capital injection is required to secure long-term flight operations and to advance necessary maintenance and modernization of the terminal and infrastructure.
The general meeting on June 3, 2026, marks a critical juncture. By this date, the city of Klagenfurt must decide whether to defend its percentage stake by injecting €2,3 million or accept a dilution of its shares. Given the city's already strained budget due to ongoing obligations and declining revenues, raising this sum within the administration is considered virtually impossible. In this context, the proposal by City Councillor Julian Geier gains significance; he takes a proactive approach and seeks a fundamental restructuring of the ownership.
The share transfer model and the tax component
The core of the new proposal is based on a legal separation between participation in the airport's operations and the right to develop the land belonging to the airport. The area comprises approximately 44 hectares of land not directly required for flight operations, which experts consider to be high-value real estate reserves. Geier's plan stipulates that the city transfer its shares in the company to the state free of charge. In return, the state would indemnify the city against all future additional funding obligations and investment costs.
A crucial aspect of this model is safeguarding the city's interests in the properties. A contractual agreement will ensure that Klagenfurt continues to receive 20 percent of the proceeds from any potential sale of these plots. For this arrangement to be legally valid with the tax authorities, the city would have to pay a real estate transfer tax, estimated at approximately €500.000 based on the current market value of the land. While this amount represents a financial burden, it is considerably more manageable compared to the millions of euros in investments anticipated in the coming years and could be financed from existing reserves or through short-term reallocations.
Property valuation and necessary expert reports
Before such a deal between the city and the state can be finalized, a comprehensive valuation report is essential. The 44 hectares of land currently under consideration must be assessed objectively to accurately calculate the land transfer tax and to verify the appropriateness of the contractual profit-sharing arrangement. The city's investment officer, Constance Mochar, has already received the relevant documents, which now require legal and economic review.
Critics point out that transferring shares to another public body free of charge is complex, especially when it comes to the long-term commitment of revenues. The question arises as to how resilient such a pledge would be over decades if the political climate in Carinthia changes or the airport is transferred to a different ownership structure. Nevertheless, the potential of the land is considered enormous. Developing a business park or attracting logistics companies to the airport's peripheral areas could generate significant sums in the future, from which the city of Klagenfurt would benefit even without operational responsibility.
Operational challenges and future flight schedule development
While politicians argue over the shareholding, the airport's operational management faces the challenge of stabilizing the flight schedule for the coming seasons. Rebuilding trust with international airlines after the turbulent years of the Lilihill era is a long-term task. Klagenfurt Airport is struggling to maintain connections to major hubs like Vienna, Frankfurt, and Munich. Any capital increase primarily serves to ensure ongoing operations and enhance the airport's attractiveness to airlines through competitive fee structures and modern technology.
Should the city of Klagenfurt withdraw as an active shareholder, the state of Carinthia would become the sole decision-maker. This could accelerate decision-making processes, as coordination between two local authorities would be eliminated. However, for the state, this also means bearing the entire financial risk alone. The state's willingness to assume this risk depends significantly on how important the airport is considered for Carinthia's economy and tourism. The current state government has repeatedly committed to maintaining the airport but demands a clear increase in efficiency and transparent use of funds.
Political dynamics in the town hall and next steps
Next week will show whether Geier's proposal finds a majority in the Klagenfurt city council. The political camps are divided: While proponents see the plan as a major boost for the budget, others warn of a sell-off of city property and the loss of co-determination rights in one of the region's most important infrastructure projects. The city administration must weigh whether the loss of voting rights in the general assembly is offset by the savings from the multi-million-euro investment.
Simultaneously, talks are underway at the state level. The Carinthian state holding company must indicate its willingness to acquire the city's shares under the aforementioned conditions – particularly the 20 percent share of revenue from land sales. Failure to negotiate could result in the city of Klagenfurt effectively losing its shares by not participating in the capital increase, without securing the tax-backed revenue guarantee for the future. This would be the worst-case scenario for the city, as it would then have neither influence nor financial benefit from the land.
Outlook for the General Assembly on June 3, 2026
The decision must be made under considerable time pressure. The general meeting on June 3, 2026, is fast approaching, and the city must have a clear position by then. The case of Klagenfurt Airport exemplifies the difficulties smaller regional airports face in surviving in a competitive market environment without massive public subsidies. The planned capital increase is just one component of a larger restructuring plan designed to make Klagenfurt Airport resilient in the long term.
Whether the Geier model will catch on and serve as a blueprint for other municipal investments remains to be seen. It's an attempt to combine sound business practices with strategic foresight. The city of Klagenfurt could thus limit its debt burden while simultaneously maintaining a foothold should the airport land become a goldmine for real estate development in a few years. The citizens of Klagenfurt and the airport employees are now eagerly awaiting the signal from City Hall that will set the course for the coming decades.