WOOD Flash - Aegean Airlines: to invest up to EUR 50m in Volotea, could get up to a 21% stake in the LCC

Aegean Airlines has announced that it may be buying up to a 21% stake in Volotea, investing up to EUR 50m via convertible notes, in two tranches of Volotea capital increases. At this stage, we see this mostly as a financial investment. That said, the two carriers will also be cross-selling each other’s tickets, and Volotea may use Aegean’s maintenance facilities and its flight simulators. Privately-owned, we have not found Volotea's recent financial statements, so we cannot assess the implied multiples at which Aegean is buying. That said, the value of the transaction is not too material for Aegean. The full EUR 50m investment would translate into c.5% of its market cap and would account for less than 30% of its 2023 FCF (with leases as opex). The amount at risk for Aegean seems limited, in our view, and the commercial cooperation between the two carriers could prove mutually beneficial, enhancing Aegean's reach in France, Italy and Spain. The cooperation of the two airlines may, over time, also enhance connectivity to and from regional airports in Greece, in our view.
Volotea is a low-cost European airline, active primarily in mid-sized cities in Spain, France and Italy. It operates a fleet of 44 aircraft of the A320 family. Aegean operates a fleet of 79 aircraft, 16 turboprops, and 63 jets of the A320 family.