Event: According to Bloomberg (9 November), Turkey has asked advisers to prepare a plan on the sale of the state-held stake in Turkish Airlines (THY) by YE12. Options reportedly include a block sale of the stake, a secondary offering or a combination of the two.

Action: The THY stake has been included in Turkey's privatisation plan, and the SPO and stake-sale options have both been discussed in the press. The latter also echoes recent discussions between Turkish Airlines and Lufthansa about deeper ties with one another. We think the combination of a block sale and SPO is more likely, as we doubt the state would cede a controlling stake to the strategic partner. In addition, Turkish-registered airlines operating within the country's borders require majority Turkish ownership. We think any possible positive effects of a potential THY-Lufthansa co-operation would be long term, although short-term overhang issues could create pressure on the stock.

Source: bne