Lufthansa to pursue Air China venture on Merkel Beijing trip

[FRANKFURT] Deutsche Lufthansa AG chief executive officer Carsten Spohr will travel to Beijing with German Chancellor Angela Merkel next week in a bid to seal a joint venture deal with Air China Ltd seen as crucial to bolstering his company's access to the world's second-largest economy.

Mr Spohr will meet with senior management from the Chinese flag carrier with the aim of making progress on the commercial pact, the CEO said in an interview in Dublin, while adding that the talks are "complex."

Lufthansa is pursuing joint ventures as part of a plan to stem the loss of lucrative long-haul traffic to fast-growing rivals from the Persian Gulf. Such deals allow partners to coordinate capacity and share revenue and represent the closest accords possible in the industry short of full-scale mergers.

A final agreement with Air China would complete Lufthansa's roll call of accords covering all of its main long-haul markets, though the plan is running behind schedule, with sign-off having originally targeted for last year.

Europe's third-biggest airline already has deals in place with Air Canada and United Continental Holdings Inc on trans-Atlantic flights and with ANA Holdings Inc. in the Germany-Japan market, and in November announced a tie-up with Singapore Airlines Ltd from the city state to Germany and Switzerland.

In Europe, Lufthansa is seeking partners for its Eurowings arm that could boost the low-cost carrier's fleet above the 100 aircraft needed to advance its goal of becoming the region's third-largest discounter behind Ryanair Holdings Plc and EasyJet Plc, Mr Spohr said.

Negotiations with pilots and cabin crew on topics spanning wages to retirement benefits remain "constructive," and securing the "right deal is more important than a fast deal," according to Mr Spohr, who spoke Wednesday before the International Air Transport Association annual meeting, which is being held in the Irish capital.

BLOOMBERG