JetBlue, Lufthansa Plan Code-Share Deal

Lufthansa on Monday announced plans to expand co-operation with JetBlue Airways (JBLU) in a move that may irk rivals such as Delta Air Lines Inc. (DAL).

The German flag carrier and JetBlue plan a code-share deal from early October, a move that will leverage the U.S. carrier's strong position at New York's John F. Kennedy airport.

Deustche Lufthansa AG (DLAKY) acquired a 19% stake in parent JetBlue Airways Group Inc. in January 2008, but planned cooperation required the U.S. airline to first upgrade some of its reservations technology.

The planned tie had already raised concern from some rivals wary of efforts by members of the Lufthansa-led Star Alliance to boost their presence at JFK.

Delta last year called for Lufthansa to drop its two JetBlue board seats and "restructure" its relationship if it wanted additional anti-trust clearance for Star members.

U.S. authorities subsequently granted more immunity as Continental Airlines Inc. (CAL) - which has a strong presence in the New York area - prepares to join Star.

Delta warned in a filing last year that closer ties between Lufthansa and JetBlue could lead to "competitive mischief" in the New York market by the enlarged Star grouping.

JetBlue is not a member of any alliance and has no plans to join.

Initially, the airlines plan to offer connecting service between 12 JetBlue destinations in the U.S. and Puerto Rico and Lufthansa's network of 180 destinations in Europe, the Middle East, Africa and Asia. The agreement must be approved by the U.S. Transportation Department.

"It's now up to the DOT," JetBlue spokesman Sebastian White said. "But we don't see any problems. We think this will great for the consumer."

Delta said Monday that it stood by its earlier comments.

Customers traveling from a number of U.S. cities on JetBlue would be able to buy tickets for connecting Lufthansa flights at JFK in New York, or at Boston, for Lufthansa flights bound for destinations throughout Europe, the Middle East, Africa and Asia.

White said JetBlue's position as the biggest carrier of U.S. domestic passengers at JFK puts the airline in a good position to strike more code-share deals with foreign airlines, which are barred by U.S. regulations from flying from city to city within the U.S.

JetBlue will have even better ticketing capabilities when it begins using the Sabre ticket distribution system in January, White said.

The DOT application asks for permission to code-share on all JetBlue and Lufthansa flights, he added.

Code-sharing is designed to make booking flights more convenient for passengers, as well as to add revenue for partner airlines.

Lufthansa provides service from 22 North American gateways, while JetBlue flies to 10 international locations.

-By Ann Keeton, Dow Jones Newswires; 312-750-4120; [e-mail]

(Doug Cameron contributed to this article)