THY-Lufthansa in Early Talks With No Sale Planned, Turkey Says

Turkish Airlines is at the earliest stages of discussions about closer ties to Deutsche Lufthansa AG (LHA) and the sale of stock held by the government isn’t currently on the agenda, Turkish Finance Minister Mehmet Simsek said today.

“There is work to increase cooperation and advance the dialogue, especially in some commercial areas,” Simsek told reporters. “But it’s too early to say anything apart from that.”

The state doesn’t intend to reduce its 49 percent stake in the carrier “at the moment,” the minister said at a ceremony in Istanbul to mark the addition of a 200th plane. Unicredit Bank AG (UCG) and Turkiye Sinai Kalkinma Bankasi AS (TSKB) were asked to put together a plan on a possible sale, three people with knowledge of the matter said last week.

Turkish Airlines, (THYAO) as Turk Hava Yollari is known, aims to boost its fleet to 350 planes by 2020, Chairman Hamdi Topcu said at the event, tapping an air-travel sector that’s growing three times faster than the national economy and is forecast to be worth $15 billion in revenue this year, according to Simsek.

The government is working on a plan to boost capacity at Istanbul’s Ataturk airport by turning an adjoining military site into a terminal, Simsek said, adding that the 98 aircraft bays there aren’t sufficient. Aeroports de Paris has a controlling stake in TAV Havalimanlari Holding AS, the hub’s operator.

Lufthansa may seek deeper ties to Turkish Airlines to thwart competition from Gulf rivals and match European peers that already have Mideast partnerships. German Chancellor Angela Merkel suggested bringing the Star alliance partners closer when Turkish Prime Minister Recep Tayyip Erdogan visited Germany Oct. 31, according to state-owned Anatolia news agency.

To contact the reporter on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net; Chad Thomas at cthomas16@bloomberg.net

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