Alliance talks with Air China productive - United
By Tamora Vidaillet
BEIJING, Dec 8 (Reuters) - UAL Corp's (NYSE:UAL - news) United Airlines has held productive discussions with Chinese carrier Air China on a potential deal to bring it into the Star Alliance, United Airlines' president Rono J.Dutta said on Saturday.
``Discussions are progressing quite productively,'' U.S.-based Dutta told reporters.
``I've talked with Air China and we are in discussions with them to see if we can work a deal to bring them into Star (Alliance),'' he said.
But Dutta declined to say whether Air China -- China's main international airline -- would be the preferred partner of Star Alliance and said that United Airlines was in discussions with a number of other Chinese carriers.
``Clearly Air China is a very strong player,'' he said.
German flag carrier Lufthansa , another member of Star Alliance, has said that Air China would be its preferred candidate for the alliance.
Chinese airlines were still weighing up the benefits of striking deals with Star Alliance rather than airline alliances such as Oneworld, Dutta said.
One burning issue that was still to be resolved was Air China's existing code sharing agreement with United Airlines rival Northwest Airlines, he said.
``(Air China) has to assess whether United is stronger or Northwest is stronger for that partner,'' he said.
United has yet to set a code-share relationship with a Chinese airline and has said various factors need to be resolved before entering such an agreement.
Aviation industry analysts have said Air China would have to resolve problems related to the issue in order to join the Star Alliance -- a group of airlines which also includes Singapore Airlines , Air Canada, and Mexicana Airlines, owned by government-controlled holding Cintra .
CHINA EYED FROM A DISTANCE
Dutta said that the fast growing China market was key to United's long-term plans but the group's focus was firmly centred on returning to profitability in the aftermath of the September 11 attacks in the United States.
The airline industry was hit hard after air travel crumpled in the wake of the attacks and passengers cut down on flying, worsening the already precarious financial situation of many carriers.
``So far there has been a lot of China in our portfolio and we want alot of China in our portfolio as well,'' he said.
But there would be no growth in China over the next year or so until the economic outlook improved, he said, adding that many issues were dictated by regulatory issues in China.
United now has 21 frequencies, the maximum possible, between mainland China and the United States and there were currently no plans to decrease that number, the company said.