The acquisition in Air Europa by Turkish Airlines (THY) obtaining a minority stake “will strengthen its network reach to Latin America and Spain, with minimal impact on leverage,” This is according to a Tuesday assessment by credit rating agency Fitch Ratings.
Subject to regulatory permissions, which the agency said should be secured given Turkish Airlines and Air Europa’s relatively small stake and low network overlap, the deal is expected to completion in six to twelve months. The move was characterized as “credit positive.”
It further claimed that Turkish carrier will probably pay 300 million euros ($352 million) for a “25%-30%” share in Air Europa. After being the only bidder after Lufthansa and Air France-KLM withdrew from the competition, Turkish Airlines announced last month that their offer had been accepted.
At the time, the business stated that after technical and financial adjustments at the close stage, the precise percentage of the minority stock that Turkish Airlines would purchase will be decided.
“The acquisition will support passenger and air cargo connectivity between Spain and Türkiye, creating opportunities for Turkish Airlines to tap into fast-growing Latin America/Europe routes,” Fitch said on Tuesday.
It added that despite being far smaller than Turkish Airlines, Air Europa is far more powerful on South American routes and enjoys the advantage of being the second-largest airline at Spain’s Madrid-Barajas airport.
“International Airlines Group (IAG) retains its 20% stake in Air Europa. Its 2024 bid to acquire the remaining 80% failed due to the significant anti-trust related concessions required, given IAG’s relatively high overlap with Air Europe through Iberia and Vueling,” Fitch said.
“The transaction continues a trend among large European carriers to engage in minority stakes or bolt-on acquisitions, as in the case of Air France KLM (BBB-/Stable) and SAS, and Deutsche Lufthansa AG (BBB-/Stable) and ITA Airways.”
Air Europa, which was established in 1986, is the third-biggest airline in Spain, after Iberia and Vueling.
Source Daily Sabah
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