Turkish Air Weighs M&A as Defense on Rising Protectionism

Updated on
  • Chairman Ayci assesses investment in overseas carriers
  • Focus is on China, India, U.S.; Alitalia not a priority

Turkish Airlines Chairman Ilker Ayci is evaluating potential investments in other airlines to help safeguard expansion if the rise in protectionism presents hurdles to growth.

The carrier, which offers more destinations than any other, is examining prospects in a range of markets, including India, China and the U.S., Ayci said in an interview at the Paris Air Show.

Ilker Ayci in Paris, June 20.

Photographer: Marlene Awaad/Bloomberg

“We’ve expanded through organic growth so far, but protectionist policies are rising,” he said. “So we’re exploring cross-airline relationships -- equity or non-equity. It’s a long-term strategy, and it’s too early to say right now whether it will become a reality.”

The three leading Persian Gulf carriers, including Dubai-based Emirates, are facing pushback from U.S. and European authorities against rapid growth that has captured more of the lucrative intercontinental travel market. Turkish Airlines, which operates from a hub in Istanbul, hasn’t been targeted so far, though it has been pursuing a similar strategy.

The Turkish carrier is “following some growing airlines” in the U.S. and could even invest in China, Ayci said. India, the fastest-growing major aviation market, also is attractive. Abu Dhabi-based Etihad Airways already has established a bridgehead there through a stake in Jet Airways India Ltd., and Qatar Airways plans to open its own unit in the country.

Turkish won’t follow Etihad targeting weaker regional airlines, the executive said. The Gulf airline is re-evaluating that strategy amid struggles at affiliates Alitalia SpA and Air Berlin Plc. An investment strategy is complex for carriers like Turkish, as ownership limitations in many regions of the world limit foreign holdings in airlines.

Shares in Turkish rose as much as 1.3 percent in Istanbul and traded 0.9 percent higher at 11:55 a.m. local time, pushing their gain this year to 50 percent.

Turkish Airlines, formally known as Turk Hava Yollari AO, also has looked at Alitalia, which has filed for bankruptcy, Ayci said, though the Rome-based carrier isn’t especially attractive because it generally serves markets where his company already has sufficient exposure.

Turkish Airlines, which serves almost 300 destinations, could pursue joint ventures as an alternative to investment, adding to the relationship it has with Deutsche Lufthansa AG in running short-distance operator SunExpress, Ayci said.

— With assistance by Richard Weiss

(Updates with additional comment in sixth paragraph, shares in seventh.)
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