Etihad and Lufthansa Announce Closer Partnership

In a joint press conference with Etihad CEO James Hogan and Lufthansa CEO Carsten Spohr, the two carriers announced a strengthened codeshare agreement, terminal relocations for Etihad in Germany as well as new LSG Sky Chefs and Lufthansa Technik contracts with Etihad. No merger or Star Alliance membership for Etihad…just yet.

The Press Conference

Held in Abu Dhabi, the press conference began with the sort of video (below) that typically precedes a merger announcement, highlighting the fleet and onboard product of first Lufthansa, then Etihad.

Hogan then began with a “housekeeping mater” in which he defended his tenure at Etihad and re-asserted that it was a “mutual decision” for him to step down.

Corporate doublespeak aside, here is what we learned this morning–

• Expanding codeshare agreement – the codeshare agreement between Etihad and Lufthansa will expand to include more parts of Germany for Etihad and the Middle East and Indian Subcontinent for Lufthansa. The mutual goal is to eventually expand the codeshare agreement to Lufthansa’s South American routes as well. Etihad does not serve South America outside of São Paulo.
• Etihad will move into the Lufthansa terminals in Munich (MUC) and Frankfurt (FRA) – the move will allow for “more seamless” transitions between the two carriers
• A 4-year 100MN USD global catering contract between LSG and Etihad – LSG will become the primary catering provider for Etihad outside of Abu Dhabi in 16 cities
• Lufthansa Technik and Etihad have signed a memorandum of iderstanding (MOU) for LH Teknik to provide maintenance outside of Abu Dhabi

Interesting Commentary from Lufthansa CEO

Calling today’s news the first step in developing further opportunities, Spohr highlighted the 20th Anniversary of Star Alliance and noted its “success” and “diversity” in 28 member carriers around the world. But he then added, “Star Alliance is only one of our approaches to partnership” and mentioned Lufthansa’s joint-venture agreement with United and Air Canada to North America and with ANA to Japan. He also mentioned a new partnership between Lufthansa and Air China and another with Singapore Airlines. Finally, he mentioned a partnership between Lufthansa Cargo and Cathay Pacific Cargo. Cathay Pacific, of course, is in the oneworld alliance.

Both Hogan and Spohr used the “synergies” and “seamless” keywords that seem to inevitably foreshadow greater cooperation. Might Star Alliance membership be in the cards? Hard to say — Lucky addressed the issue nicely yesterday. There are just as many reasons against it as there are for it. During the question time, Hogan was asked if this partnership will lead to a JV agreement and his response was “perhaps” and that there are “other ideas” as well.

Spohr added that Lufthansa has not changed its position on opposing subsidies for airlines, calling on airlines to be bound by the World Trade Organization (airlines are not currently). Walking a fine line, he conceded that it was possible for partners to have opposing positions on this issue. He fiercely defended globalization in what a reporter called an era of looking inward and condemned protectionism, arguing the airline industry must push globalization beyond aviation itself.

Slides and Photos from the Etihad/Lufthansa Press Conference

The press conference lasted for about 30 minutes and included a number of slides which I have included below–

CONCLUSION

While the news will not upend the airline landscape, the closer working relationship between Etihad and Lufthansa would have been unthinkable in the not-to-distant past. That a Gulf Carrier and European legacy carrier are now working closely together represents a notable shift in the airline world. I expect the partnership to grow deeper.

You can watch the full press conference here: