Is Lufthansa’s tie-up with Etihad a sign of détente?

Etihad Airways and Lufthansa finalized a codeshare agreement, set to start in January 2017, and subject to government approval. The agreement signals a strategic cooperation between two former, and often bitter rivals along a vital passenger and cargo route.

Etihad attributed its record-breaking cargo volumes in October to “volumes from Europe to Asia Pacific,” and the Lufthansa deal gives the UAE-based carrier a competitive edge against other regional carriers that are attempting to route Europe-Asia cargo through their Middle East hubs.

The German carrier will begin putting its ‘LH’ code on Etihad Airways’ twice-daily flights between Abu Dhabi and Frankfurt and its twice-daily services between Abu Dhabi and Munich. Etihad will, in turn, put its ‘EY’ code on Lufthansa’s services between Frankfurt and Rio de Janeiro, Brazil as well as Bogotá, Colombia.

Lufthansa also agreed to lease 38 aircraft from airberlin, in which Etihad holds a 29 percent stake. The aircraft will fly for Lufthansa’s Eurowings Group and its network carrier Austrian Airlines. While the two deals are unrelated, they were announced on the same day.

The leasing agreement has a term of six years and becomes effective February 2017.

News of the deal is raising speculation that the frosty relationship between European and Gulf carriers might be thawing. One former critic, Carsten Spohr, CEO of Lufthansa Group, said the deal and wet-lease contract were part of an important alliance between the two carriers. “We are looking forward to partnering with the Etihad Aviation Group. The wet-lease contract with Air Berlin fosters the growth of our Eurowings Group,” he said. “We will consider extending our cooperation in other areas,” he added.