Turkish Airlines has confirmed that it has reached a deal with the Madrid-based airline Air Europa to acquire a minority stake in the carrier.
The Turkish flag carrier will invest €300 million in Air Europa, mainly in the form of a capital increase, with the exact percentage of the minority stake to be determined at a later date.
Air Europa has been on the hunt for an airline to invest in it for some time, but two attempts by fellow Madrid-based airline conglomerate IAG failed on the back of concerns raised by competition regulators.
Turkish Airlines already flies to more destinations around the world than any other airline, but the carrier’s weak spot remains in South America, which is well served by Air Europa.
In an update to investors, Turkish Airlines said the investment in Air Europa was specifically designed to strengthen its position in Latin America.
IAG, which owns British Airways and Iberia, abandoned its last attempt to acquire Air Europa last August. The company had wanted to acquire Air Europa for €400 million as part of a plan to dominate the skies between its Madrid Barajas hub and South America.
Unsurprisingly, European competition authorities raised significant concerns about the proposed transaction, fearing it would have significantly stifled competition and hit consumers with reduced choice and higher ticket prices.
IAG had originally wanted to acquire Air Europa in 2019 for €1 billion, but when the pandemic hit the following year, IAG quickly slammed the brakes on the deal. In the years that followed, IAG built up a 20% minority stake in Air Europa before divesting its shares when the takeover deal was abandoned.
Turkish Airlines believes it will take between six months to a year to complete the transaction.
Air Europa currently serves nine destinations in Latin and South America that Turkish Airlines does not fly to. In an update to investors, Turkish Airlines said it hoped its investment in Air Europa would drive more tourists to Türkiye via a one-stop connection in Madrid.
What’s On The Horizon?
There is a continuing trend of consolidation within the European airline business, which has recently included:
- Lufthansa acquired a minority stake in Italy’s ITA Airways last July.
- The Air France-KLM Group is planning to take a controlling stake in Scandinavia’s SAS.
The next acquisition race is likely to be Portugal’s TAP, which has been looking for a new investor for some time, although this process has been significantly delayed by the government.
Potential buyers include IAG, as well as Lufthansa and the Air France-KLM Group.
