Lufthansa teams up with rival Etihad in code-share deal

BERLIN/FRANKFURT (Reuters) – Lufthansa has struck its first cooperation deal with a Gulf rival, agreeing to sell tickets jointly with Etihad Airways on some routes and leaving the door open to further agreements in other areas.

Germany's biggest airline has been a fierce critic of Gulf carriers on the grounds their state backing gives them an unfair competitive advantage and it has in the past objected to codesharing by German rival Air Berlin and Etihad.

Other airlines already work with fast-growing Middle Eastern carriers, however, and the code-sharing deal signed on Friday comes on top of Lufthansa's agreement to lease planes and crew from struggling Air Berlin, which is 29-percent owned by Etihad.

Australia's Qantas Airways has a similar code-sharing agreement with Etihad rival Emirates while British Airways has a revenue-sharing deal with Qatar Airways, which owns 20 percent of BA's parent IAG.

Independent industry consultant John Strickland said Lufthansa's deal with Etihad was a positive move.

"Other major airline groups like IAG & Qantas have long seen the value of this," he said.

Under the deal, Lufthansa will place its LH code on Etihad's flights between Abu Dhabi and Frankfurt and Munich. Lufthansa had previously scrapped its Frankfurt-Abu Dhabi flights saying they were not profitable due to overcapacity created by the code-share deal between Etihad and Air Berlin.

Etihad will in turn put its EY code on Lufthansa's long-haul services between Frankfurt and Rio de Janeiro and Bogota.

The two will also consider extending their cooperation in other areas, Lufthansa CEO Carsten Spohr said in a statement.

Qatar and IAG, for example, have also cooperated on their cargo businesses.

A source said Lufthansa and Etihad were planning code shares on more routes. A Lufthansa spokesman declined to comment further on possible areas of cooperation.

Others analysts cautioned against reading too much into the deal, highlighting it was restricted in its scope for now.

"The limited code share agreement announced today is in our view a marginal price component for the Air Berlin deal," Kepler Cheuvreux analyst Ruxandra Haradau-Doeser said, adding that she did not think a deeper partnership was likely.