Lufthansa chief rejects state ‘subsidies’ for airlines

AFP: The Lufthansa chief last week 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 that a codeshare agreement had taken effect, and they also sealed a $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.

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.

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% stake.

Under the outgoing 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% of Alitalia, 19.9% of Virgin Australia and three percent 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 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.

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.

Lufthansa sees rapid growth of Gulf airlines slowing

ABU DHABI (Reuters): Lufthansa believes the rapid growth phase of Gulf airlines is coming to end, which could help to ease some of the pressure in a highly competitive industry, its chief executive said on.

Speaking after signing catering and maintenance deals with Abu Dhabi-based Etihad, Lufthansa CEO Carsten Spohr said there were signs Gulf rivals were reaching the limits of their recent growth.

“I’ll leave that to the airlines in this region but I think this industry needs to see a healthier relationship between (supply) and demand. And I am optimistic we will see this in the years to come,” he said.

Lufthansa has long been critical of the rapid growth of Gulf carriers, which include Emirates and Qatar Airways as well as Etihad, saying the fact they are state backed creates an unfair playing field.

Spohr said he “stands firm” on that view.

European airlines such as Lufthansa have been cutting costs and revamping their cabins to try to cope with competition from the Gulf carriers on long-haul routes.

But some Gulf carriers have recently also struck a more cautious tone. Etihad, for example, is reviewing its network of equity stakes in carriers Air Berlin, Alitalia and Air Serbia.

“The equity stakes continue,” outgoing Etihad Aviation Group CEO James Hogan said at the same event. “The chairman has been very clear that the investment in those equity airlines continues in terms of strengthening the partnership.”