Turkish Airlines and Air Europa Seal Strategic Alliance with a €275 Million Injection
Turkish Airlines and Air Europa have reached a binding agreement. The Turkish carrier will provide a €275M loan in exchange for up to 27% of the capital, redefining the Spanish airline's future.
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Turkish Airlines will provide Air Europa with a €275 million loan, structured to convert into an equity stake of between 26% and 27% in the Spanish carrier. Both airlines are moving to formalize a binding agreement that, once regulatory approvals are secured, will set a new course for the Globalia group company.
The deal, confirmed by Air Europa's President, Juan José Hidalgo, aims to strengthen the airline's financial structure. Speaking to the EFE news agency, Hidalgo expressed his satisfaction with the agreement, stating it gives him the “peace of mind that the airline will continue and that Spain will have its own national company.”
According to 5Dias reports, the primary purpose of this capital injection is the early repayment of the €475 million loan granted by the Sociedad Estatal de Participaciones Industriales (SEPI), Spain's state-owned holding company, to help Air Europa navigate the impact of the pandemic. The airline had already settled another €150 million loan from the Instituto de Crédito Oficial (ICO) last May. With the funds from Turkish Airlines and its cash reserves, Air Europa aims to clear its debts with the state.
What is Air Europa's new ownership structure?
IAG (International Airlines Group): Retains its 20% stake, previously acquired as a financial investment.
Turkish Airlines: Will become a shareholder with a 26% or 27% stake following the loan conversion.
Hidalgo Family/Globalia: Will remain the majority shareholder.
Juan José Hidalgo has assured that he does not intend to sell more shares, calling IAG and THY "the best partners I could have."
The entry of Turkish Airlines, a heavyweight in the Star Alliance, into the capital of Air Europa (a member of SkyTeam), creates an unprecedented dynamic at Adolfo Suárez Madrid-Barajas Airport (MAD). This move comes after other major European groups, such as Air France-KLM and Lufthansa, explored an acquisition but ultimately withdrew from negotiations in recent weeks, as reported by several sources.
Hidalgo noted that from now on, “there will be a strong company competing in two terminals and with two alliances. Madrid will be the only airport where there is a company with two alliances and two terminals.” This move positions the Hidalgo-THY alliance as a strengthened, direct competitor to IAG and Iberia, the pillars of the Oneworld alliance in Madrid.
The Long Road to an Agreement
This agreement closes a nearly six-year cycle of negotiations and high uncertainty for Air Europa. In November 2019, IAG signed an initial deal to acquire the airline for €1 billion. The COVID-19 crisis, which Hidalgo stated caused €1.4 billion in losses for the company, halted and devalued the transaction.
A second attempt by IAG for €500 million also failed, this time due to the stringent conditions imposed by Brussels' competition regulators, which made the integration unfeasible for the Spanish-British holding company. The President of Globalia insists that the state support received “was never a bailout; we were granted a credit guaranteed by Globalia” to overcome a “true ordeal” caused by a global crisis.
The necessary regulatory approvals for the transaction with Turkish Airlines are expected between September and November of this year, at which point the funds will be used to repay SEPI. Hidalgo also reiterated his commitment to the airline's workforce of over 20,000 employees, assuring that no layoffs will occur.
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