Germany's biggest airline has partnered with the Chinese carrier enabling the two companies to operate joint flights between Europe and China. Lufthansa called Air China an "ideal partner" for expanding in Asia.
During the signing ceremony at Beijing Capital International Airport on Tuesday, Lufthansa chief executive Carsten Spohr said the two airlines' partnership was intended to profit from air traffic growth in Asia, which was "the most important growth market worldwide."
The two groups plan to coordinate their schedules, offer common fares and improve their offers to corporate clients and frequent flyers under the arrangement. As well as Lufthansa itself, the deal covers subsidiaries Austrian Airlines and Swiss International Airlines.
Passengers travelling into Europe from China will be able to connect through the Lufthansa's hubs in Frankfurt, Zurich and Vienna. The pair also promised additional routes in China with Air China and via code-sharing for those travelling in the other direction. Flights under the joint venture scheme are scheduled to begin with the 2017 summer timetable.
Air China is the Asian country's third biggest flag carrier. Its Chairman Cai Jianjiang said the agreement was "another major step of Air China's globalization strategy," adding that it would give Air China passengers "more and flexible flight choices, favorable fare products and seamless travel experiences."
Lufthansa and Air China are facing huge competition from other international carriers on the Asian markets, notably from Gulf airlines. Therefore, the companies said they were "not in a position to raise fares." Flights would be priced "depending on joint availability of seats and demand," Spohr told journalists in Beijing, meaning Lufthansa fares will remain as diverse as now.
The alliance with Air China is yet another cooperation by Lufthansa, which has already teamed up with Japan's ANA and Singapore Airlines in Asia, as well as with United Airlines and Air Canada in North America. Almost half of the German airline's long-haul flights are now covered by such agreements.
Like a number of European airlines, Lufthansa is struggling this year, following a series of terror attacks in Europe and geopolitical uncertainty that has cut into bookings.
In July, the carrier cut its profit targets for the year, expecting to do even worse in 2016 than in 2015. Last year, Lufthansa's image was severely damaged after a co-pilot deliberately crashed a plane from subsidiary Germanwings with 149 other people on board.
Moreover, it was hit by major strikes by its pilots and cabin crew as it seeks to bring down costs in the face of cut-price competition from European rivals.
Preliminary figures for the first half-year have shown that Lufthansa sales between January and June were down by two percent, compared with the same period in 2015.