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Cathay Pacific

Lufthansa boss calls Cathay Pacific the ‘perfect partner’, hinting at more business deals between the two airlines

Cathay ‘focused on premium services and sustainability’ with a proven track record, said chief executive of German airline on the sidelines of industry gathering in Mexico

PUBLISHED : Wednesday, 07 June, 2017, 1:46pm
UPDATED : Wednesday, 07 June, 2017, 10:39pm

Germany’s national airline has praised Cathay Pacific Airways as the “perfect” partner with the carrier’s chief hinting at more scope for business deals with Hong Kong’s flagship carrier.

Lufthansa, part of the largest airline in Europe, talked up its expanded relationship with Cathay Pacific on air cargo services, and more recently, passenger flights.

The mutual tie up between the pair was just the beginning, according to the German airline’s chief executive Carsten Spohr, who was attending a gathering of airline executives in the Mexican resort city of Cancun. His airline’s ties to Cathay Pacific would become more important as it was similar to one with the Hong Kong carrier’s major shareholder Air China, he said.

Spohr said however he was not interested in buying a stake in Cathay Pacific, stating he was more interested in investing in airlines at home in Europe.

“Cathay Pacific is the perfect fit for Lufthansa in many ways. It is an airline focused on premium, it is focused on sustainability, and not just around for one or two years,” Spohr said, on the sidelines of the aviation summit, explaining that he found both businesses complemented each other.

Doubling down on the China market, Spohr added: “We are very close to Air China with our joint venture, obviously there is a link between Cathay and Air China as well, so we are establishing more of a trilateral relationship.”

As airlines seek new partnerships outside of traditional airline alliances to find alternatives to stay competitive, Cathay Pacific and Lufthansa initially struck a worldwide agreement to cooperate on cargo flights between Asia and Europe, and led to cooperation on flights between Europe, Hong Kong and Australia.

The deal has provided a boost to Cathay Pacific’s air cargo business, and has given the airline more access to Germany and Eastern Europe, meanwhile the German’s carrier and subsidiaries Swiss and Austrian Airlines have gained better access to the Hong Kong customers and the Australian market.

Interest in Cathay Pacific is rising, with Japan Airlines signalling it was willing to cooperate further with the Hong Kong airline.

Lufthansa, in reference to the current Cathay Pacific “codeshare” relationship on passenger flights, said the current deal was heading in the right direction to a point later on where both airlines could force a closer commercial pact.

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“There are hurdles to do that, anti-trust issues, and other restrictions, but yes we believe the joint venture [on passenger flights] is the crown of any partnership,” Spohr said.

A joint venture typically means both airlines would operate specific flights together, share revenue, coordinate flight schedules and airfares, for example, and gives passengers more choice.

Cementing deals with a joint venture is the preferred step for the German airline. It said 75 per cent of its revenue from international flights came from pacts it has with Air Canada, United Airlines, Air China, Singapore Airlines and Japan’s All Nippon Airways.

‘We are always striving for a potential crowning of the partnership,” Spohr added. “We are a long way, away from that but cargo we are there but we just started the [passenger flights] cooperation.”