Lufthansa and Turkish Airlines

Lufthansa has admitted to having general talks with Turkish Airlines about co-operation but the Turkish Prime Minister appears to have let the cat out of the bag by suggesting this could lead to the creation of a joint-company.

We could be wrong but this does not sound likely. It looks rather that the Turks are putting pressure on Germany to come up with some sort of deal.

It is one thing for shareholders in British Airways and Iberia to be persuaded to give up their individual holdings and take shares in a holding company instead but to expect shareholders in a tightly-regulated European company to swap their shares for a new company with extensive exposure in a country outside Europe, which does not have the highest reputation for shareholder disclosure, is surely a step too far.

However, there are many things that can be done without a full financial union. Lufthansa already has a joint shareholding with Turkish Airlines in a Turkish charter airline and Turkish Airlines is a big customer of Lufthansa Technik so the two companies are used to working together.

Turkish Airlines would gain much-needed prestige from any fuller co-operation with Lufthansa whereas Lufthansa would gain a  partner that is a match for the Gulf airlines that it sees as such a threat to its longhaul market. Just looking at route maps, a deal could make sense.

The big danger in this is for Lufthansa. They might be a bit stodgy but they have a fine reputation for safety. Turkish Airlines have been spending a lot of money on polishing their image and their safety record has improved from the dismal situation some years ago but there are still too many stories of sloppy behaviour at all levels of the company which would not be tolerated in a true top class airline.

A number of co-operation agreements have been made between airlines recently and Lufthansa might feel itself under pressure to react. Maybe they do need a partner but we must hope Lufthansa does not allow itself to be pressurised into something it could well live to regret.