- Air Europa strengthens its leadership in the aviation market with the entry of Turkish Airlines.
The €300 million investment values the airline as a whole at €1.175 billion. IAG will retain its 20% stake.
Full stop to one of the most intense corporate episodes in the recent history of Spain’s aviation sector. Air Europa has completed the deal announced in August with Turkish Airlines, under which the Turkish carrier will take a 26% stake in the Spanish airline in exchange for €300 million. The transaction values the Globalia-owned company at €1.175 billion, €175 million more than what IAG agreed to pay for 100% of Air Europa just before the pandemic, in a deal that eventually stalled after an attempted integration of Iberia and Air Europa at Madrid-Barajas airport, where both will continue to compete.
Turkish Airlines will become the second-largest shareholder in Air Europa, behind the Hidalgo family, which will control the company with 54% through Globalia. The Turkish carrier’s entry is being structured through a convertible loan that will be exchanged for the aforementioned stake of around 26%. IAG, for its part, will keep its current 20% shareholding by purchasing shares from Globalia. The CEO of the airline conglomerate, Luis Gallego, told this newspaper last month that he would defend his position with an investment of around €55 million.
The transaction, according to Air Europa, marks a milestone by bringing together in its share capital three major players in the aviation sector: IAG, Turkish and Air Europa itself, Spain’s second network airline after Iberia. Globalia has been quick to stress that Spanish capital will remain at the helm of the company, thus guaranteeing air links between Spain and Latin America. This is music to the Government’s ears. Another key element is the destination of the funds raised: the early repayment of the €475 million in public financing that the State Industrial Holdings Company (SEPI) granted Air Europa to withstand the impact of the pandemic. The company, which had begun to choke on the interest burden, will use its own resources and the €300 million contributed by its new shareholder to redeem this debt.
For the Government, recovering what was the largest pandemic-era lifeline granted to a strategic company is crucial, both politically and economically. The Solvency Support Fund for Strategic Companies (FASEE) deployed €2.681 billion in aid to 28 companies up to the summer of 2022 and is still owed €1.844 billion by 21 of them through November 2026 (in some cases, maturities extend to 2029). The financing granted to Air Europa thus represented 25.7% of the outstanding balance of these bailouts. This support—audited and backed by strong guarantees from Globalia—put the Government on the ropes, given that it coincided with the professional relationship between Javier Hidalgo (then CEO of Globalia) and Begoña Gómez, wife of Prime Minister Pedro Sánchez. It was also controversial due to the role played in the negotiations by then Transport Minister José Luis Ábalos and intermediary Víctor de Aldama, both under investigation in the so-called “face mask” corruption case. The Hidalgo family has always denied receiving any preferential treatment.
The entry of Turkish Airlines—49.12% owned by the Turkish state—is also moving quietly along the administrative track, requiring the Government’s approval via the Foreign Investment Board (Jinvex), as it involves acquiring more than 10% of a company considered strategic. In August last year, the Council of Ministers vetoed the takeover bid by the Hungarian consortium Ganz Mavag for Talgo on national security grounds. In this case, Turkish has not been perceived as a threat, since under EU ownership and control rules, which require that the majority of an EU airline’s capital be in the hands of EU investors, it cannot aspire to more than 50% of the shares in a Community carrier.
A foothold
With Air Europa outside the major European airline groups, the friendly arrival of a player like Turkish in its share capital will help secure the access of the company chaired by Juan José Hidalgo to new aircraft. Air Europa, with 57 aircraft (28 narrow-body and 29 wide-body for long-haul operations), struggled to secure its leases during the health crisis and still finds it difficult to grow its fleet amid a shortage of available aircraft on the market. It is now awaiting the arrival of 18 B737 MAX and is negotiating further orders to continue expanding its long-haul network. Having Turkish behind it will help.
Another lever Globalia intends to activate is aircraft maintenance, by maximizing the use of its Madrid-Barajas hangar, opened in January 2024. Turkish plans to transfer know-how in this line of business and will have, in its investee, a platform in the western Mediterranean to service its fleet.
In recent weeks, the buyer has explained that being in Air Europa, even with a minority stake, will strengthen its position in the industry and help create a bridge between Latin America and Spain on the one side and Turkey on the other. The Turkish airline has been advised in this process by BNP and Pérez-Llorca, while Air Europa has relied on PJT Partners and Latham & Watkins.
The completion of the sale of the stake to Turkish Airlines brings to an end years of failed attempts to inject capital into the Spanish airline. Iberia was among the most interested buyers and launched a first offensive on the Globalia carrier in October 2019. That move came in response to advanced talks between the Hidalgo family’s holding company and Air France, one of IAG’s and Iberia’s main rivals for Europe–America traffic.
One year later came the pandemic and the aforementioned public bailout of Air Europa. That first assault by Iberia was frozen in 2021 due to the strong reservations expressed by the European Commission. In 2023, IAG again tried to acquire the 80% of the capital it did not control (as a first step it had bought 10% for €100 million), but it abandoned its proposal in 2024, once again because the European Commission’s Directorate-General for Competition demanded significant divestments of routes and airport slots in favor of rivals.
After IAG stepped back, several suitors showed interest in entering Air Europa, including Germany’s Lufthansa and Air France-KLM. All of them withdrew from talks after failing to reach an agreement with the Hidalgo family on either price or stake size. The founding family always wanted to retain control and more than 50% of the capital, perhaps in anticipation of a revaluation of the company on the back of the good times the aviation sector is currently enjoying, with a view to future divestments. Following the two failed attempts, the way was cleared for Turkish Airlines.
Negotiations with what is now one of the world’s largest airlines began before the summer, under the supervision of Javier Hidalgo, the founder’s son. After the acceptance of a binding offer from Turkish, the structuring of the deal has been completed, providing an immediate injection of funds while regulatory and competition approvals are pending. The key issue is to ensure that this move does not clash with Regulation (EU) 2022/2560 of the European Parliament and of the Council on foreign subsidies that distort the internal market.
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