Air Europa closes €300 million deal with Turkish Airlines

PalmAir Europa, the airline based in Llucmajor, has finalized its agreement with Turkish Airlines, which will allow the Turkish carrier to acquire a stake in the Spanish airline through a €300 million investment, the company announced early this morning. The transaction has been structured as a convertible loan, which will be exchanged for a stake of approximately 26% in Air Europa, once all regulatory requirements are met, the airline explained. This deal values Air Europa, which is predominantly Spanish and family-owned, at around €1.175 billion, the company stated.

The Hidalgo family, through Globalia, will remain the majority shareholder of the company, while IAG will retain its current stake through the purchase of shares in Globalia. Air Europa has announced that with this capital injection and its own resources, it will cancel the ordinary and participating loans with the State Industrial Holdings Company (SEPI), as well as the accrued interest, totaling almost 500 million euros, a year ahead of schedule. After settling, last May, the 141 million euros plus interest on the bank loan received in May 2020, with participation and guarantee from the Official Credit Institute (ICO), Air Europa is now closing "an important stage in the financial deleveraging process undertaken in recent years," the airline confirmed. The company highlighted that the €475 million loan from SEPI was essential not only to guarantee the full recovery of operations after the pandemic, but also to generate a very positive return for the national economy. Thus, it indicated that not only were approximately 4,000 jobs preserved, but more than 600 new jobs were created, bringing the total number of employees at the airline to approximately 4,600. This translates to nearly €70,000 in daily interest payments.

Throughout this period, Air Europa paid the State approximately €70,000 per day in interest, totaling more than €97.2 million, which represents an additional 20% on the loaned capital for SEPI, the company explained. Negotiations for the transaction began before the summer, and following Turkish Airlines' acceptance of a binding offer during the summer months, the structuring of the operation has been completed. According to Air Europa, this will provide immediate funding while regulatory and competition approvals are obtained. Air Europa emphasized that the transaction represents "a significant milestone" for the commercial aviation sector by bringing together three of the industry's major players: IAG, which will retain a 20% stake, Turkish Airlines, and Air Europa.