SunExpress: does it have a strategic value to Lufthansa & Turkish Airlines to outweigh its losses?

A low-cost carrier by virtue of its unit costs and revenues, SunExpress' costs are nevertheless too high for its revenues and it lost EUR12 million in 2012. Jointly owned by Turkish Airlines and Lufthansa, it has a focus on leisure routes between Germany and Turkey. It has some market-leading positions on key routes, but also faces a large number of competitors in this very price sensitive market. Its highly seasonal capacity profile adds to the challenge of achieving year-round profitability.

SunExpress' value to its parent companies extends beyond its position on routes between their two countries. It has also provided them with more than 20 years of working together and this could point the way to closer cooperation between them in other regions as they look to combat the threat of the Gulf carriers. The appointment last week of the CEO of SunExpress Germany, a subsidiary of SunExpress, to the Supervisory Board of Lufthansa Group company Austrian Airlines further highlights the growing ties.