Turkish Airlines submits bid to acquire Air Europa's capital

BarcelonaTurkish Airlines, the Turkish flag carrier, has submitted a binding offer to acquire Air Europa, currently holding a minority stake. The offer comes after Germany's Lufthansa ruled out a stake in Air Europa.

In a statement on its website, Turkish asserts that its acquisition of Air Europa will serve to "strengthen" and "improve" its position in the European airline market and its competitiveness. According to the document, the management of the Turkish and Spanish airlines held non-binding talks to establish collaboration agreements, in addition to the equity stake. "Following feasibility studies, the investment has been assessed as consistent with the company's long-term value generation objectives in its 2033 strategy," Turkish explains in the statement.

Turkish particularly values Air Europa's network of connections to the Iberian Peninsula and Latin America, both for passenger and freight traffic. With this entry into the shareholding, the Turkish airline will be able to maintain "accelerated and large-scale growth in the Latin American market." Furthermore, the group foresees a "multiplier effect" for its activity, thanks to possible subsidiaries and joint ventures, "new sources of income" and "greater regional operational diversity."

With 49.1% of its shares controlled by the Turkish government, Turkish is one of the world's leading airlines, but it has a significant presence in connections from Europe to Asia – especially in the Middle East and Central Asia – and Africa, especially through its hub from Istanbul. Potential synergies with Air Europa would allow it to expand its service westward. For its part, Air Europa flies to 55 destinations worldwide.

Interest from other airlines

The announcement comes just three days after Lufthansa withdrew its stake in Air Europa, as did IAG, the parent company of Iberia and British Airways, just a year ago, which already controls 20% of the capital (the remaining 80% is in the hands of the Hidalgo family). In the case of IAG, the Spanish-British company tried to buy its competitor since 2019, but ultimately He finally gave up in August last year after obstacles from Brussels, which saw the merger as problematic because it would reduce market competition. The group that controls the Dutch company KLM and the French company Air France has also recently ruled out a purchase of the Spanish company's shares.

The interest of the various airlines in Air Europa comes because the company went through periods of financial difficulties that led to a bailout by the Spanish government, which allocated 475 million euros to save the group in October 2020, in the midst of the pandemic, when air traffic had plummeted worldwide. This rescue led to the judicial investigation affecting Begoña Gómez, wife of Spanish Prime Minister Pedro Sánchez.

Last year, however, the Palma-based company closed the year with a profit of €116 million and the announcement that it had repaid the loan received from the Official Credit Institute (ICO), through which the state bailed it out.