The agreement signed on Friday by Lufthansa and Etihad is a further step on the road to cooperation, even if it remains - for the time being - modest in scope. It simply provides for a code sharing on the Frankfurt-Abu Dhabi and Munich-Abu Dhabi routes (served by Etihad) and on the Frankfurt-Bogota and Frankfurt-Rio de Janeiro routes (served by Lufthansa). " We can, however, envisage extending our cooperation to other areas of activity in the future" said the head of the German airline, Carsten Spohr, in a press release. The CEO of Etihad, James Hogan, has nothing but praise for his new German partner: " Lufthansa enjoys a great reputation around the world. I am delighted that we can work together in the future." he assures us.
For years, Lufthansa has constantly vilified the Gulf airlines, denouncing the tacit support of the governments of the Emirates and therefore the "unilateral support" of the United Arab Emirates.lack of "balanced" competition. A year ago, he was still asking the European authorities toprohibit the territory of the European Union to the Gulf companies for their transgression of the social and environmental rules in force in Europe. But all that is now forgotten. The irresistible rise of the Gulf carriers has given way to pragmatism on the part of the German airline's management.
It started at the end of the summer with Germany's second-largest airline, Airberlin. The Abu Dhabi carrier holds 29.21% of it. While Etihad's investment in Airberlin is highly strategic, giving the airline a leading role in continental Europe's largest market, the abyssal losses of the German carrier - a billion euros in recent years - are turning into a nightmare for Abu Dhabi's management. Hence the solution of joining forces with Lufthansa to solving the Airberlin case.
For its part, Lufthansa is seeking to increase its power on the point-to-point network from Germany and Austria through its 'hybrid' subsidiary Eurowings. It has therefore immediate need for aircraft to compete on routes outside its Frankfurt and Munich hubs. Especially as cities such as Düsseldorf, Hamburg, Berlin and Stuttgart generate passenger traffic volumes of between 15 and 25 million a year.
to extend our cooperation to other areas of activity in the future
This led to an initial agreement this summer for Lufthansa to lease 38 Airberlin aircraft for Eurowings and Austrian Airlines. The agreement will be activated next February for a period of six years. For Etihad, leasing the aircraft will make it possible toinjecting over 200 million euros Annually in Airberlin, which in return will abandon its point-to-point routes and concentrate exclusively on its two hubs at Berlin Tegel and Düsseldorf.
So what could be the outcome of the Etihad-Lufthansa deal? Airberlin is probably where it's all going to hinge. The fall in oil prices in 2015 and 2016 has made the Emirates' leaders more and more concerned about the future of the airline. more cautious in their investments. For Airberlin, the agreement with Lufthansa represents a warning that Etihad could one day change its strategy in Europe and Germany through new alliances. For Lufthansa, the current agreement will make it possible to To "neutralise" a powerful competitor from the Gulf. If Etihad continues to open new routes between Germany and Abu Dhabi - which could be the case in the future with Hamburg or Stuttgart - it could work with the Lufthansa group to create synergies... Perhaps even with Eurowings.
As for Airberlin, its refocusing on its two hubs in Berlin and Düsseldorf has weakened the company as a 'global' competitor to Lufthansa. In fact, apart from routes to America, Airberlin is becoming a short/medium-haul airline, closer to Eurowings than to Lufthansa. This should help it to finally limit its losses and perhaps return to financial equilibrium... which is what shareholder Etihad wanted above all.
