[180117.EN.BIZ] Etihad Quashes Rumours of Acquiring Stake in Lufthansa

ETIHAD CEO James Hogan says there are no plans to take a stake in Lufthansa though the carriers are exploring the possibility of expanding their recent cooperation agreement.

When asked whether Etihad intends to acquire a holding in Lufthansa, Mr Hogan replied "no," rejecting an Italian newspaper report.

Speaking on the sidelines of a conference in Dublin, the CEO said the companies are instead discussing the deepening of a code-share deal announced last month, according to Bloomberg.

Lufthansa and Etihad in December agreed to share seat sales on four routes in the wake of a separate accord that will see the German carrier lease 38 aircraft from rival Air Berlin, which is 49 per cent owned by the Gulf company and struggling with mounting losses.

Mr Hogan said Etihad remains "committed" to its so-called equity alliance, which has involved taking minority stakes in a range of often struggling carriers worldwide, including Air Berlin and Alitalia.

The strategy has produced cost synergies and added "hundreds of millions of dollars" to Etihad's revenues by helping to fill its planes, he said, while arguing that "a longer-term view" needs to be taken of its limited success in reshaping the carriers it has invested in, given that ownership caps mean ultimate control still remains in local hands.

Mr Hogan said that Air Berlin needed "radical change" from the start, while arguing that it, like Alitalia, is now "back on track" following the deal with Lufthansa and another to provide aircraft to TUI AG.

He said it's time for ownership rules to be scrapped to allow outside companies to take majority holdings in airlines to ease access to capital. Within the European Union the cap bars foreign operators from owning more than 49 per cent of the bloc's carriers and has curbed Etihad's ability to run both Alitalia and Air Berlin.

The rule would also limit any Etihad stake in Lufthansa, even if it wanted one, especially since a 30 per cent investment would trigger a mandatory takeover bid under German law that would in turn jeopardise route rights.

Source : HKSG.