Etihad and Lufthansa sign code-share deal

Etihad Airways has signed a ground- breaking agreement with German giant Lufthansa to code-share on some flights, in a deal that is a prelude to a much closer relationship between the two national carriers.

James Hogan, president and chief executive of Etihad, said: “It is very clear to us at Etihad Airways that Lufthansa is a like-minded, forward-thinking organisation with which we can do strong, meaningful and mutually beneficial business.”

The first stage of the deal allows the airlines to share codes on some flights between the UAE, Germany and South Amer- ica, but its import is far greater than this initial co-operation. Lufthansa had been among the big European airlines that complained about Gulf airlines’ alleged anti-competitive practices in the long- running row over “open skies” policy.

The German carrier also backed a long-running legal action in Germany over code-shares by Etihad partner airberlin, which has since been resolved.

Mr Hogan said: “We have long seen Germany as a key strategic market for Etihad and this new relationship with Lufthansa marks the next step in our commitment to the leading European aviation group.

“Lufthansa is highly respected globally, and I’m very pleased that we will work together in the future for the benefit of our customers.”

Etihad also confirmed a “wet lease” deal between Lufthansa and airberlin, under which two Lufthansa airlines, Eurowings and Austrian Airlines, take over full operation and maintenance of 38 aircraft formerly flown by airberlin.

That deal has already been announced as part of a wide-ranging restructuring of the loss-making airberlin.

Carsten Spohr, chairman and chief executive of Lufthansa, said: “We are looking forward to partnering with Etihad. The wet-lease contract with airberlin fosters the growth of our Eurowings Group. The code-share agreement of Lufthansa and Etihad will offer our customers more benefits and complement both airlines’ networks. We will consider extending our cooperation in other areas.”

Despite the row over “open skies”, Mr Hogan and Mr Spohr are said to enjoy a good relationship and mutual respect over a number of years.

Under the code-share agreement, the German airline will place its LH code on Etihad Airways’ twice daily non-stop flights between its home base of Abu Dhabi and Frankfurt and its twice daily non- stop services between Abu Dhabi and Munich, the biggest city in southern Germany.

The UAE’s national airline will, in turn, put its EY code on Lufthansa’s long- haul, nonstop intercontinental services between its home base of Frankfurt, the business and commercial capital of Germany, and Rio de Janeiro, Brazil, as well as Bogota, Colombia. The future cooperation is likely to involve code-sharing on other flights, but may also extend to other operational areas. Further details will be announced soon.

Etihad has code-share deals with 51 airlines, but the deal with Lufthansa is potentially the biggest and most significant.

Code-sharing allows airlines to effectively share flights by offering passengers of one carrier the ability to book a flight directly on another airline.

An aviation industry expert said: “Who’d have thought a Gulf airline would have done a deal with the German power house after all that’s happened? This dramatically strengthens Etihad’s position in Europe.”

Etihad has been directly involved in German aviation since late 2011, when it took a 29.2 per cent stake in airberlin. Airberlin joined the global Etihad Aviation Group partnership of international airlines, but struggled financially in a competitive European market.

Etihad has funded the lion’s share of airberlin losses, but points to hundreds of millions of dollars worth of revenues and cost savings as a result of the German tie-up.

It was recently estimated that the airberlin business generated $630m a year for the economy of Abu Dhabi.

A restructuring of airberlin earlier this year led to its exit from the tourism flights business and a refocusing on short and medium haul European markets.

The six-year agreement takes effect from February next year subject to any regulatory requirements.