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Lufthansa, Boeing Formalize 2-Year Relationship

Nearly two years after the project initially went into development, Lufthansa and Boeing on Tuesday have entered into a definitive service agreement to solidify the German carrier's relationship as the launch customer for the Connexion by Boeing in-flight, high-speed information service.

As previously reported, the agreement calls for the Connexion by Boeing service to be installed on Lufthansa's fleet of approximately 80 long-haul aircraft, including Boeing 747-400 and Airbus A330 and A340 aircraft, beginning in early 2004. The two aviation giants began passenger trials at the beginning of this year.

While financial terms of the service agreement were not disclosed, the capital investment comes amid one of the sharpest downturn for the industry -- one that pushed many carriers like USAir, United Airlines and American Airlines either into or to the brink of bankruptcy. Still, executives from both companies believe the advent of high-speed connectivity will be a significant benefit for both passengers and operators worldwide.

"Our dedication to innovation, customer orientation and high quality will continue to be the key for our success. For this reason, we invest even during economically difficult times in the most modern technology," said Wolfgang Mayrhuber, who will take over as Lufthansa's Chairman of the Executive Board on June 18.

In preparation for the commercial service introduction, Connexion by Boeing and Lufthansa are working on a host of payment options that will allow passengers to enjoy full access to the Internet including the use of Miles and More bonus miles or payment of a nominal service access fee.

In addition to the agreement with Lufthansa, Connexion by Boeing also signed an agreement with Lufthansa Technik AG to support the installation of the mobile information service on the Lufthansa fleet. Based on the terms of the agreement, Lufthansa Technik will support Connexion by Boeing in the design, planning and installation of the service and also produce a corresponding installation kit and supporting service bulletins that will be provided to the Boeing team.

Connexion was formed in April 2000 with the goal of equipping airlines' fleets with high-speed, satellite-based Internet connections. Boeing unveiled United Air Lines, Delta Air Lines and American Airlines as customers in June 2001. It added Lufthansa days later. But with the subsequent downturn in the industry, United, Delta and American pulled out of the venture in November, 2001, leaving Lufthansa as the venture's sole customer. Other airlines, such as British Airways, are making trials of the technology.

--Bob Liu and Thor Olavsrud contributed to this story.