Aegean Airlines intends to acquire a 21% stake in Barcelona-based regional low-cost airline Volotea, the two carriers announced on September 3, 2024.
According to the terms that have been disclosed, this investment will take the form of a €50 million convertible loan.
The loan will be structured in two equal tranches, the first of which has already been disbursed by the Greek carrier, with the second expected to be formalized in Q2 2025. Aegean Airlines is expected to then convert each of these loan tranches into equity, giving it control over 13% and 8% of the company, respectively.
Volotea’s founders and current owners will match Aegean’s contribution in equal terms.
This €100 million capital increase can be interpreted as a move to strengthen Volotea’s balance sheet ahead of a long-awaited IPO, which, after repeated delays, may finally take place in the first half of 2025. The deal will also bring about closer operational and commercial cooperation between the two carriers.
Volotea, which operates a business model is based on linking secondary cities nonstop and bypassing major hubs, has a significant footprint in the Greek market and was already codesharing with Aegean Airlines on a number of routes.
As a result of these closer ties, the two airlines will expand this cooperation to more than 140 routes and Volotea will add new flights linking Greece to Italy and France.
The tie up with Aegean also represents a significant strategic turn-around, since, until August 2024, Volotea had its sights set on taking over some of Air Europa’s short haul routes in Spain and had been planning to open its largest base to date at Madrid-Barajas International Airport (MAD).
The rationale for that plan was the window of opportunity provided by the expected imposition of remedial measures by the European Union as a pre-condition to authorize the acquisition of Air Europa, Spain’s second-largest carrier, by IAG. This would have forced IAG and its Spanish subsidiary Iberia to give away a number of routes to and from Madrid. Volotea had even closed a partnership with Colombia-based Abra Group, the parent company of Avianca, to bid for those routes.
However, the EU’s rejection of IAG’s acquisition of Air Europa put an end to those plans and seems to have focused the attention of Volotea’s managing team elsewhere.
