Deutsche Lufthansa AG and Air China Ltd. plan to finalize a joint venture this month, sealing a deal to share revenue and coordinate routes after more than two years of negotiations, people familiar with the plan said.
Talks to set up the Chinese flag carrier’s first venture with a European airline have been complex as the two sides wrangled over financial and organizational structures. After starting discussions in 2014 on expanding commercial ties, the companies failed to seal an accord in 2015 as planned.
For Lufthansa, the Air China deal completes a network of revenue-sharing agreements with major markets around the globe as the German carrier seeks to fend off threats from the likes of Emirates and Qatar Airways. Lufthansa last year struck a similar deal with Singapore Airlines Ltd., adding to its network of partners that include United Airlines, Air Canada and Japan’s ANA Holdings Inc.
Air France-KLM Group already has joint ventures with Skyteam alliance partners China Southern Airlines Co. -- the biggest Asian airline by passengers -- and China Eastern Airlines Corp. that involve timetable harmonization and cost and revenue sharing on some routes.
The Air China agreement will mean close to half of Lufthansa’s long-haul capacity will be covered by commercial joint ventures, more than any other European network carrier, according to CAPA Centre for Aviation in London.
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