Turkish Air May Order Airbus or Boeing Jumbos Next Month
Turk Hava Yollari AO, or Turkish Airlines, will order at least 15 jumbo airliners valued at $4 billion from Airbus SAS (EAD) or Boeing Co. (BA) as early as next month as it adds routes and seeks acquisitions in emerging markets.
Europe’s fifth-largest carrier plans to purchase Airbus A380 or Boeing 747-8 planes for delivery after 2014, Chairman Hamdi Topcu said in an interview in Istanbul.
Turkish Airlines is looking at jets bigger than Boeing’s 330-seat 777, currently the carrier’s largest model, as it seeks to lure transfer traffic between Europe and Asia away from rivals Air France-KLM Group, Deutsche Lufthansa AG (LHA) and British Airways-parent International Consolidated Airlines Group SA. (IAG)
“The price will determine the size of the purchase but it should not be below 15 planes,” Topcu said at the company’s headquarters near its Ataturk airport hub. “We are assessing the purchase plan in the board of directors and will make a decision on this in one month.”
Turkish Airlines (THYAO) rose 5.2 percent to 3.03 liras in Istanbul, its biggest gain since Feb. 2 and highest closing price since last August. The stock has surged 43 percent this year, valuing the company at 3.64 billion liras ($2 billion).
An order announcement may be timed to coincide with the Farnborough International Air Show, the largest aerospace event in the world this year, which runs for seven days from July 9, Topcu said, or could come later in the month. Major aircraft commitments are often revealed at expos as airlines and manufacturers seek to showcase their orders.
Turkish Airlines, which aims to raise sales to $7.8 billion this year from $7 billion in 2011, is assessing simulations of both the A380 and 747-8, as well as the price, Topcu said, adding that it won’t split the order between the two types.
The carrier currently has 39 long-haul jets, according to its website, including 12 777s and 17 passenger-variant Airbus A330s. It hasn’t ordered Boeing’s 787 or the Airbus A350, the newest wide-bodies, and is unlikely to do so as it seeks larger jets, Chief Executive Officer Temel Kotil has said.
The European manufacturer’s A380 superjumbo carries 525 people in three-cabin configuration or more than 800 in a single coach class. Boeing’s 747-8 seats 467 in three-class mode.
Including single-aisle models, Turkish Airlines currently has 179 jetliners in its fleet. That will increase to 200 by the end of this year and 206 through 2013, when an expansion program originally slated to end in 2015 will have been completed, Topcu said. With that in mind, it’s planning a next sequence of orders from 2014, with the total likely to reach at least 300 by 2023.
While the emphasis will be on adding bigger planes, the carrier is also interested in the Airbus A320 Neo and Boeing 737 MAX narrow-bodies, the executive said. The airline plans to supply crews for the expanded fleet by opening a flight school to train 300 pilots, 200 of them for its own needs, Topcu said.
Turkey’s plans to build a third airport in Istanbul, for which a tender process may begin in September, will help determine fleet size, Topcu said.
The situation at Ataturk, Istanbul’s main airport, where passenger numbers rose 17 percent last year to 37.5 million, may also be eased by increasing the number of aircraft parking bays by about 50 percent to around 150, he said. The hub is controlled by Aeroports de Paris following its investment in operator TAV Havalimanlari Holding AS (TAVHL) in March.
Turkish Airlines is looking at about 10 takeover prospects in Africa, Asia and the Middle East as it seeks hubs in Africa and Asia, Topcu said, adding that the cash and credit position is “strong,” with no upper limit to the size of a deal.
Still, its European ambitions have been curbed, with talks to buy Polish national carrier Polskie Linie Lotnicze LOT SA ending this month because of European Union rules limiting outside ownership, Topcu said. The same applies to TAP SGPS SA, which the Portuguese government is in the process of selling.
“The EU doesn’t allow us to have stake control or effective management control,” he said. “Therefore we can’t buy.” Talks on Turkey joining the bloc, which would allow its companies to make full takeovers, are on hold while a rotating presidency is held by Cyprus, whose government it doesn’t recognize.
In Europe, Turkish Airlines ranks behind only network carriers Air France-KLM Group (AF), Deutsche Lufthansa AG and IAG -- parent of British Airways and Spain’s Iberia -- plus discount leader Ryanair Holdings Plc in terms of traffic.
To contact the reporter on this story: Ercan Ersoy in Istanbul at email@example.com