By Jeffrey Dastin
MIAMI (Reuters) - Etihad Airways has reached a deal to deepen its relationship with Air France-KLM (PA:AIRF) and separately has agreed to sell its stake in Aer Lingus Group Plc (I:AERL), Etihad's Chief Executive Officer James Hogan said in an interview Sunday.
Etihad and Air France-KLM will share codes on more flights starting this year, opening more European cities to the Abu Dhabi-based airline's customers, Hogan said on the sidelines of the International Air Transport Association's (IATA) annual meeting. The airlines have yet to finalise terms of the deal.
Hogan added that Etihad will sell its 4.99-percent stake in Aer Lingus, the Irish flag carrier, in a potential takeover bid by British Airways-parent International Airlines Group (L:ICAG).
The moves reflect Etihad's strategy to grow its route map through airline partnerships. With codeshares on French domestic flights imminent, Etihad also is looking to add destinations via codeshares with Philippine Airlines, Garuda Indonesia (JK:GIAA) and Malaysia Airlines
"We're keen to maintain a relationship with (IAG). Indications are that they're interested in doing so too," Hogan said.
Kevin Knight, Etihad's chief strategy and planning officer, said in the same interview that Etihad hopes to expand its codeshare with Air France-KLM "as broadly as possible."
Etihad currently lists its flight code on nine Air France cities and 21 KLM destinations.
Hogan said sharing frequent-flier rewards would be the next step in the airline's partnership with Air France-KLM. It has not discussed or considered taking an equity stake in the European carrier, although saying this would never happen is "not possible," Hogan said.
Across the Atlantic, Knight said Etihad does not have plans to introduce new service to the United States for 24 months. The decision to focus on existing U.S. routes contrasts with competitors Emirates and Qatar Airways, which have announced new flights to seven U.S. cities this spring.
Recent expansion of Gulf-carrier service to the United States has caused tensions with U.S. airlines to boil.
U.S. airlines say their Gulf competitors have received more than $40 billion in subsidies from the United Arab Emirates and Qatar, which has allowed them to add excess capacity on key routes, drive down ticket prices and steal market share.
The Gulf airlines deny the claims. Etihad said it is required to repay loans - not subsidies - to its sole shareholder, the government of Abu Dhabi.