Lufthansa, Air China team up
July 7, 2014
A memorandum of understanding aimed at expanding their commercial partnership has been signed by Lufthansa Chief Executive Carsten Spohr and Air China President Song Zhiyong in Beijing,Germany's flag carrier Lufthansa announced.
Signing the agreement on the sidelines of a visit to China by German Chancellor Angela Merkel, Spohr said passengers would get better flight connections and services in Europe and China as a result of the deal.
"Thanks to strategic partnerships with leading airlines, the Lufthansa Group now connects the world's four largest economies even better," Spohr added.
China's aviation market is the second largest in the world and has been rapidly expanding in recent years. Lufthansa is struggling, however, to carve out a bigger market share. The joint venture with Air China is an opportunity for the German carrier to fend off rising competition on global long-haul flights from Gulf airlines such as Etihad, Emirates and Qatar Airways. In June, Lufthansa issued a profit warning for this year and 2015, blaming strong competition from state-owned rivals from the Middle East.
Measured by intercontinental traffic, Air China is China's biggest airline with 49 million passengers. Like Lufthansa, it's been a member of the world's largest airline alliance, the Star Alliance. But cooperation within the alliance is limited to joint marketing and flight management.
The Lufthansa-Air China joint venture also includes joint billing and booking. In addition, the two airlines signed a deal to expand collaboration in the area of maintenance, repair and overhaul services.
The new partnership agreement should come into force as early as the start of the winter flight timetable in late October. According to aviation experts, it could garner additional revenue for Lufthansa of up to 50 million euros ($68 million) annually.
As a result, Lufthansa stocks were sought by investors on Monday, rising 1.2 percent to 15.90 euros a share at the Frankfurt Stock Exchange.
uhe/ng (AFP, dpa, Reuters)