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Lufthansa Bolsters China Links as Spohr Works on Revival

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July 7 (Bloomberg) -- Deutsche Lufthansa AG and Chinese flag carrier Air China Ltd., both members of the Star Alliance group of airlines, agreed to expand commercial ties as travel and trade between the two countries grows.

A preliminary agreement between the carriers was announced today during a visit by German Chancellor Angela Merkel to China that included a range of agreements including signature on a deal for China to buy Airbus Group helicopters.

“We are delighted that, together with Air China, we will be able to offer our customers, particularly in Europe and China, even better flight connections and services in the future,” Lufthansa Chief Executive Spohr said at the signing in Beijing, according to a statement from the airline.

The announcement for the planned joint venture comes just two days before Spohr is set to present his corporate strategy. Lufthansa has been squeezed by carriers in the Middle East who push more capacity into the lucrative trans-Atlantic routes, as well as low-cost airlines that undercut Lufthansa on its domestic business, where the airline has responded with its Germanwings budget subsidiary that Spohr said is working well.

The commercial joint venture between Lufthansa and the Chinese airline, still to be worked out, will add to existing partnerships with United Airlines and with Air Canada between Europe and North America, since 1998, and with Japan’s All Nippon, since 2012, on routes between Europe and Japan, the German airline said.

Air China has been a member of Star Alliance, the world’s largest airline grouping, since 2007.

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To contact the reporter on this story: Andrea Rothman in Toulouse at aerothman@bloomberg.net

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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