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Etihad and Lufthansa enter new commercial partnership

February 2, 2017 Headline News No Comments Email Email

Etihad and Lufthansa have expanded their recent code-share deal, turning it into what they describe as a “new commercial partnership” covering in-flight catering and aircraft maintenance.

The two airlines, which don’t usually see eye-to-eye on state subsidies and other matters, have reached a USD 100 million global catering agreement. The deal will also see them work together on aircraft maintenance, repair and overhaul, as well as sharing codes on flights between Frankfurt, Munich and Abu Dhabi (which went on sale yesterday) with Rio de Janeiro and Bogota to follow.

Etihad operations will relocate to Lufthansa terminals in Frankfurt and Munich.

The announcement came last night at a joint press conference live-streamed around the world from Abu Dhabi, in which the chief executives of both airline groups spelled out plans to broaden their commercial partnership.

Etihad’s James Hogan speaking at yesterday’s media conference

Etihad Aviation Group president and chief executive, James Hogan, made clear the code share deal did not involve an equity partnership, which made the partnership different from the arrangements Etihad has with other airlines in which it has bought a minority stake.

“Partnerships are at the heart of our strategy and remain fundamental for us to compete effectively and efficiently in a complex and competitive global market,” Hogan said.

“Our collaboration with one of the aviation industry’s most established and recognised brands is undoubtedly the most significant non-equity partnership with an airline we have ever announced.

“This partnership is the platform for a much wider strategic collaboration between our two organisations. It demonstrates the commitment of the Etihad Aviation Group Board and Abu Dhabi to our European growth strategy.”

Lufthansa Group chairman and chief executive, Carsten Spohr, championed the role of aviation as a bastion of globalisation.

“We are the good guys of globalisation,” he declared, standing against the “dangerous trend of protectionism”.

Spohr said the cooperation with Etihad would create added value for customers and shareholders. “Partnering with the Etihad Aviation Group fits perfectly the Lufthansa Group’s global strategy for our passenger airlines and service companies.”

A partnership was like a road, Spohr said, and “today marks the beginning”.

Questioned about Lufthansa’s previous clashes with Etihad, Spohr said collaborators didn’t necessarily have to share the same views on everything. It was still Lufthansa’s view that the industry should be like the World Trade Organisation, where certain rules exist and should be obeyed.

The four-year catering contract will see Lufthansa’s LSG Sky Chefs provide catering services to Etihad Airways in 16 cities in Europe, Asia and the Americas. This makes LSG the largest provider of catering services to the UAE’s national airline, outside its Abu Dhabi home base.

Etihad Aviation Group and Lufthansa Technik (LHT) also signed an MoU to explore cooperation in maintenance, repair and overhaul services across Etihad Airways and its airline equity partners, and opportunities for synergies with Etihad Airways Engineering.

Etihad Airways and Lufthansa are also exploring further cooperation in a number of areas, including freight operations, procurement and passenger services to improve their competitive offering globally and in the European market.

The previously announced codeshare between the two airline groups went on sale yesterday, 1 February 2017, for flights between Abu Dhabi and Germany. Lufthansa will place its ‘LH’ code on Etihad Airways’ twice daily flights between its Abu Dhabi hub and both Frankfurt and Munich. Etihad will put its ‘EY’ code on Lufthansa’s long-haul, non-stop intercontinental services between its home base of Frankfurt, the business and commercial capital of Germany, and Rio de Janeiro in Brazil and the Colombian capital, Bogota as soon as government approval is obtained.

The codeshare agreement will grow both carriers’ global networks, giving Lufthansa increased access to important feeder markets throughout the Indian Subcontinent via Abu Dhabi, while Etihad will gain access into South America through Germany.

To facilitate both connectivity and the customer experience associated with this codeshare, the Abu Dhabi-based airline will also move its operations at Lufthansa’s hubs, from Terminal 2 to Terminal 1 in Frankfurt, and Terminal 1 to Terminal 2 in Munich.

The Lufthansa Group signed an agreement in December 2016 with airberlin, in which Etihad Aviation Group holds a 29% stake, for the wet-lease of 38 aircraft. Lufthansa’s point-to-point carrier Eurowings will wet lease 33 aircraft, and Austrian Airlines, a Lufthansa Group airline, will take on five aircraft. The agreement between Eurowings and Air Berlin, signed on 16 December 2016, will last for six years and is slated to begin on 10 February 2017 when the first aircraft starts operating for Eurowings.

Written by Peter Needham

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