Turkish Airlines set to buy Air Malta

The Times of Malta has spent the last few days speculating heavily on the likelihood of a “strategic alliance” between Air Malta and Turkish Airlines. Given that the two airlines already codeshare, the most likely end result of these talks is Turkish Airlines taking a stake in air Malta.

Quite how much of a stake this is, remains to be seen. The Times of Malta reported that an Air Malta “company source” told them that “the government is currently leaving all its options open and is not excluding anything. Discussions range from a strategic partnership to full takeover of Air Malta.”

In an interesting further development, Maltese Prime Minister Joseph Muscat then confirmed yesterday that Air Malta is considering a strategic partnership with another airline, although he would not elaborate on the nature of the partnership, nor the airline. However, you can rest fairly assured it is Turkish Airlines.

What would Turkish Airlines investment mean?

The details are currently so sketchy, it is impossible to say. However, a much-needed cash injection into Air Malta would be the most obvious starting point. Indeed, such investment may well be the only way to safeguard Air Malta’s future. The political “elephant in the corner” is that the Turkish government currently owns 49.12% of Turkish Airlines (the rest is publicly traded). As such, we could potentially be faced with a position where the majority owner of Air Malta, the national airline of Malta, is the government of Turkey (so probably best not to mention 1565). Such is the nature of global commerce, I suppose…

In any event, should there be a Turkish investment, the hope would then be that Turkish Airlines can use its global branding power, infrastructure and expertise to run Air Malta more efficiently and profitably, with a better emphasis on offering a “premium product”, distinguishable from the budget carriers (something Turkish Airlines currently does very well).

The other potential early outcome, given the enormous uncertainty around Air Malta’s poor frequent flyer programme, Flypass, is that Air Malta might join Turkish Airlines’s Miles&Smiles. This would be a touch odd, given that Miles&Smiles is currently a Turkish Airlines-dedicated frequent flyer scheme, but it’s been done before: for example, British Airways shares its scheme with sister companies Vueling and Iberia, while Lufthansa’s Miles&More extends to a wide network of airlines.

Another possibility is that Air Malta would join Turkish Airlines in the Star Alliance network, although I would not expect this to happen any time soon.

Ultimately, there is little doubt that Air Malta is bleeding money at the moment. As such, investment from a well-run, global and profitable airline has to be seen as a positive thing. Certainly, it is preferable to insolvency.