Vienna - Austria's government decided Tuesday to take over debts worth 500 million euros (657 million dollars) of Austrian Airlines AG, as one of the necessary steps to complete the carrier's takeover by Deutsche Lufthansa AG.

In addition, the government approved an interim loan worth 200 million euros for the ailing flag carrier, which expects to end the year with a net loss of up to 415 million euros.

In early December, Austria's state holding OeIAG signed a contract to sell its 42-per-cent stake in Austrian Airlines to Lufthansa, which the German carrier plans to increase to 100 per cent.

Under the deal, Austria agreed to take over around half of Austrian Airline's net debt of currently 903 million euros.

The closing of the sale is pending on approval from the European Commission. (dpa)