Lufthansa chief rejects 'subsidies' as he signs Etihad deal

[ABU DHABI] The Lufthansa chief on Wednesday reiterated the German carrier's opposition to state subsidies for airlines, as he signed a cooperation deal with Abu Dhabi's Etihad, one of the main Gulf carriers accused of receiving government support.

"It is not a secret that Lufthansa has always been and remains an opponent of state subsidies," Carsten Spohr said at a joint press conference in Abu Dhabi with Etihad chief James Hogan.

He said a partnership should be based on "openness and fairness", while adding that two successful groups could have their differences and still become "successful partners".

The two carriers said Wednesday that a codeshare agreement had taken effect, and they also sealed a US$100-million global catering accord and signed an engineering memorandum of understanding.

Western legacy carriers have long accused the three fast-growing Gulf carriers, Etihad and Dubai's Emirates and Qatar Airways, of receiving state subsidies that give them an edge over competitors.

Mr Spohr told reporters he would like to see the rules of the World Trade Organisation applied in aviation, "as we see that for other global industries".

However, relationships between governments and airlines appeared likely to grow as "we see a wave of protectionism around the world", he said.

Mr Spohr, who has in the past dismissed speculation that Etihad would buy a share in Lufthansa, said the airline industry needed "rationalisation" with a "healthy relationship between offer and demand".

The German carrier agreed in December to lease 38 aircraft from struggling Air Berlin, in which Etihad has a 29 per cent stake.

Under the outgoing Mr Hogan, Etihad pursued an ambitious expansion policy through equity partnerships in other airlines.

It saw Etihad spend hundreds of millions on stakes in foreign airlines, including acquisitions of 49 per cent of Alitalia, 19.9 per cent of Virgin Australia and three per cent of Irish carrier Aer Lingus that it offloaded in 2015.

Some of the investments have been costly, however, with Etihad having had to keep Air Berlin alive with regular cash injections.

Etihad, which announced last month that Mr Hogan would step down in the second half of 2017 after more than a decade at the helm, has said the Abu Dhabi-based carrier will review its strategy.

On Wednesday, Mr Hogan defended his policies, saying Etihad and its shareholders continued to support an expansion strategy that the carrier would "fine-tune".

"Partnerships are at the heart of our strategy," he said.

AFP