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Lufthansa, Air China Inch Toward Landmark JV

Lufthansa, Air China Inch Toward Landmark JVLufthansa, Air China Inch Toward Landmark JV

Deutsche Lufthansa AG and Air China Ltd. plan to finalize a joint venture this month, sealing a deal to share revenue and coordinate routes after more than two years of negotiations, sources familiar with the matter said.

Lufthansa CEO Carsten Spohr plans to travel to Beijing to attend a signing ceremony scheduled for September 20, sources said, who asked not to be identified prior to an announcement, Bloomberg reported.

The joint venture is the closest the two carriers can get under legal restrictions limiting foreign control of airlines.

Talks to set up the first venture between a European and Chinese airline have been complex, as the two sides wrangled over financial and organizational structure.

After starting discussions in 2014 on expanding commercial ties, the carriers failed to seal an accord in 2015 as planned.

Securing links to China gives Lufthansa an edge over European rivals. The deal also completes a network of revenue-sharing agreements with major markets around the globe, as the German carrier seeks to fend off threats from the likes of Emirates and Qatar Airways.

Lufthansa last year struck a similar deal with Singapore Airlines Ltd., adding to its network of partners that include United Airlines, Air Canada and Japan’s ANA Holdings Inc.

The agreement will mean close to half of Lufthansa’s capacity on long-haul routes will be covered by commercial joint ventures, more than any other European network carrier, according to an estimate by CAPA Center for Aviation in London.

It also deepens ties between Lufthansa and Air China. In 1989, the two carriers jointly established maintenance company Ameco Beijing, which employs more than 11,000 people. The airlines also have been operating passenger flights under code-share agreements since 2000.