Recalling the difficulties experienced in global aviation markets in 2008, Topçu said they have taken the necessary measures to offset losses. “The number of carriers who knocked on our doors for partnerships as they were feeling serious financial problems has reached 14 so far. … Some of these firms asked us to acquire them. However, we have to scrutinize these offers so as to avoid possible losses,” he explained. European carriers were maybe the worst affected by problems in global aviation markets in the past three years. Most European carriers have reportedly been in contact with relatively stronger firms for strategic partnerships in hopes of staying afloat, and THY is one of the targeted companies. Topçu acknowledges this.
THY has been associated with separate acquisitions in Europe, including Czech Airlines, Polish LOT and Serbia’s JAT Airways. The most recent such examples were Spanair and Hungary’s Malev, which requested THY’s help for strategic partnerships shortly before they went bankrupt.
“We held talks with Spanair; however, following market research we figured partnering with this carrier would bring very little benefit to THY. So we had to turn their offer down.” Topçu says they received a similar offer from Malev but would not include this in their agenda. A week ago, Spanish airline Spanair ceased operations because of a lack of funds, canceling 220 flights and leaving 22,000 passengers stranded. The same week, Hungary’s national carrier Malev also ceased operations, blaming what it called an “unsustainable” financial situation. Meanwhile, another Spanish carrier, Air Nostrum, announced on Tuesday it would lay off 1,800 workers for two years following financial problems.Drawing attention to these problems, Topçu thinks some European carriers might have no choice but to join larger firms in the near future. “I think only the large brands will manage to stand on their own two feet, with small firms being eliminated from the markets.”
Underlying this is the surge in crude prices in global markets, a situation putting particular carriers in serious trouble. Oil prices rose to above $99 a barrel on Wednesday, while investors followed a looming Iranian crude crisis with concern. One critical fact, observers argued, is that low-cost European competitors were maneuvering faster to exploit the gap collapsing firms were leaving in the market. Several budget carriers, including Ireland’s Ryanair and Air Berlin, were quick to sweep in Hungary and Spain following the latest bankruptcies. The most likely airline to be acquired by THY is LOT as Topçu says a working group was preparing a comprehensive report on the issue. “It should be ready by the end of this month. We will make our final decision following the details in this report. Topçu said it would be the first time a Turkish carrier transferred know-how abroad should THY acquire LOT.
“We will apply the same management model here in İstanbul in Warsaw,” he explained. The carrier currently holds a 49 percent stake in Bosnia and Herzegovina’s BH Airlines, its only partnership thus far with a foreign carrier. Topçu also said THY staff members have received job offers from some of the world’s leading carriers. “People appreciate our successful corporate management. THY’s former revenue management section head will soon join Qatar Airways.”
THY increased its revenue by 35 percent in the first three quarters of last year over the same months of 2010. In the same period, the number of passengers carried by the national carrier increased by 11 percent to 24.3 million. With 176 aircraft in its fleet, the carrier operates 5,107 weekly flights to 187 domestic and international destinations. Established in 1933, a 49.12 percent stake in the İstanbul-based carrier belongs to Turkey’s Privatization Administration (ÖİB), while the remaining 50.88 is publicly traded. Meanwhile, THY had to cancel 70 domestic and international flights on Tuesday as bad weather conditions started to take a toll. Snowstorms brought daily life close to a standstill in İstanbul throughout last week, with the number of THY’s cancelled flights to and from İstanbul Atatürk Airport nearing 200.
