Arabian investor buys into MNG

Ghitha Aeroinvest Holding has acquired 44% of the shares of the private Turkish cargo carrier MNG Airlines for USD 211.2 million. The deal is signed and sealed, confirmed the investor’s parent company, Abu Dhabi-based Ghitha Holding PJSC. The acquisition, widely ignored by media and the aviation industry, applies retroactively from 01FEB24.

M&A experts point out that two key reasons may have prompted investor Ghitha to buy a large stake in MNG: one is based on financial, the other on strategic considerations. Abu Dhabi-headquartered Ghitha Aeroinvest does not provide backgrounds of its move.

Significant milestone
However, local experts estimate that financial considerations are the main driver of the deal. MNG is well established in the market, growth driven and a solidly managed private cargo airline. Founded in FEB96 by Mehmet Nazif Günal, MNG Havayollari ve Tasimacilik A.S. is profitable, ending fiscal 2022 with a surplus of USD 67 million, which represents a y-o-y growth of 32%. It operates its main hub in Istanbul, has a fleet of 11 freighters with an average age of 23+ years and serves a global network spanning 41 countries. In addition to scheduled flights, it offers charter services to interested parties. Main items transported are perishable products, dangerous goods and a broad variety of standard shipment.

On the occasion of the signing ceremony, Gokay Ozdemir, Vice Chairman of the Board stated, “MNG Airlines is committed to further enhancing the global aviation landscape, and this partnership [with Ghitha] marks a significant milestone on our journey. We look forward to a fruitful collaboration and endless skies ahead.”

Strategic considerations
That will commence slightly above zero level because the US$211.2 million filling MNG’s coffers do not suffice to roll over the aging fleet. However, the funds should form the basis for leasing modern, fuel-efficient freighters. In his speech following the signing of the contract, Falal Ameen, Group Chief Executive Officer of Ghitha Holding, highlighted another important aspect – the investor’s strategic motive: “The integration of MNG Airlines into our portfolio is a significant step on our way to becoming a regional powerhouse in the food trade. This partnership not only expands our logistical capabilities, but also strengthens our commitment to providing our customers with the highest quality products sourced from around the world. We are proud to utilize MNG’s expertise in freight and logistics to further enhance our service offering and evolve in line with our customers’ needs and preferences.”

Freighter fleet needs to be revamped
However, embarking on the “endless skies ahead” mentioned by the executive can only be achieved if the carrier modernizes and expands its fleet. This is an urgent must since progressively rising CO2 taxes tend to jeopardize MNG’s profits. This aspect was indirectly confirmed by Murathan Günal, Chairman of the Board of MNG Airlines, when signing the deal with Ghitha Aeroinvest Holding. “We are delighted to join forces with Ghitha Holding PJSC, […] This collaboration opens up new horizons for us in terms of operational capabilities and geographical reach. Together with Ghitha Holding, we look forward to setting new benchmarks in the cargo and logistics sector and to a future of mutual success.”

It’s MNG’s choice: Either modernizing the fleet or paying rising fees for CO2 emissions – photo: company courtesy.

The share of perishables will go up
Food trading is one of the investor’s hallmarks. This was confirmed by company representatives following the announcement of the MNG deal. “Ghitha Holding, with a portfolio that spans across food, agriculture, fish, dairy, poultry, vegetable oil, retail, distribution and catering services, views this acquisition as a strategic move to expand its capabilities and reach in the global supply chain.”

Two consequences are becoming apparent: firstly, MNG is likely to be heavily integrated into the Ghitha Group’s supply chain. Market observers point out a second aspect: The share of food products flown by MNG will increase significantly.

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