Austria approved the sale of its stake in Austrian Airlines to Lufthansa on Friday, despite protests from unions, opposition parties and rival airlines.
The airline is losing money and heavily in debt.
Under the terms of the deal, the state holding company OeIAG will sell its 41.6% stake to Lufthansa for the sum of one euro cent per share or just over 366,000 euros.
The sum could eventually reach 162 million euros, depending on AUA's future economic performance and the price of Lufthansa's shares over the next three years.
Another condition of the deal was that Austria absorbs 500 million euros of AUA's debts. The airline's total debt is about 1.4 billion euros.
Lufthansa is to launch a public takeover bid for the outstanding shares at a price of 4.44 euros per share or a total 215 million euros.
The Austrian carrier will remain a legally independent subsidiary with its headquarters in Vienna, its own brand name, crew and aircraft fleet.