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Airbus Ousts Boeing at Pegasus With $12 Billion A320neo Deal

Airbus SAS (EAD) said Turkish low-cost carrier Pegasus Airlines agreed to buy 75 A320neo series single- aisle jetliners, with options for 25 more. The airline currently operates a fleet built around Boeing Co. (BA)’s competing 737 model.

Pegasus’s order is valued at $12 billion including the options, Airbus said today, with the Istanbul-based carrier firmly committed to buying 58 A320neos and 17 larger A321neos.

The deal is the first for the reengined neo in the fast- growing Turkish market and takes the backlog to 1,654 jets since sales began two years ago. Deliveries will begin in three years and run through 2022, with all Boeing planes slated to exit the fleet by the following year, Pegasus Chairman Ali Sabanci said in an interview in Istanbul, where the carrier is based.

“We’re delighted that Pegasus will be the first airline in the world to switch from the Boeing 737-800 to Airbus,” Chris Buckley, the manufacturer’s executive vice president for Europe, Asia and the Pacific, said in an interview, adding that Airbus has been working with the Turkish company for a decade, with today’s deal stemming from a third attempt to sell it planes.

Turkish Expansion

Pegasus, Turkey’s largest carrier after state-owned Turk Hava Yollari AO (THYAO), or Turkish Airlines, operates a fleet of 42 Boeing aircraft, comprising 40 737-800s -- the single-aisle mainstay of operations at discount carriers including Ryanair Holdings Plc (RYA), Air Berlin Plc and Norwegian Air Shuttle ASA (NAS) -- and two older 737-400s, according to the company’s website.

Photographer: Pascal Pavani/AFP/Getty Images

Pegasus, owned by Esas Holding AS, operates a fleet of 42 aircraft and is planning an initial public offering in 2013. Close

Pegasus, owned by Esas Holding AS, operates a fleet of 42 aircraft and is planning an... Read More

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Photographer: Pascal Pavani/AFP/Getty Images

Pegasus, owned by Esas Holding AS, operates a fleet of 42 aircraft and is planning an initial public offering in 2013.

Turkish carriers have been adding overseas routes and raising capacity on domestic flights as demand for travel grows. That’s led to higher earnings even as airlines elsewhere suffer a slump in business during the global economic slowdown.

Pegasus’s A320neos will be configured in all-economy layout featuring 180 seats, with 220 on the A321s, and used on routes in Europe and the Middle East, according to the carrier.

A decision on engines will be made by the end of February and may determine the date of the first delivery, Pegasus Chief Executive Officer Sertac Haybat said in an interview. The neo comes with turbines from United Technologies Corp. (UTX)’s Pratt & Whitney unit, available beginning in 2015, or CFM International, a venture of General Electric Co. (GE) and Safran SA. (SAF), due in 2016.

The Airbus purchase will be financed with export credit from Britain, Germany and France, for which negotiations have begun and are likely to conclude a year before the first delivery, Sabanci said in the interview. There are no plans to add wide-body planes to the fleet, the chairman added.

Pegasus, based at Sabiha Gokcen airport on the Asian side of Istanbul, transformed into a discount carrier from a charter operator in 2005 after its purchase by Esas Holding AS, which also has health-care, retail, food and real estate investments.

The carrier, known as Pegasus Havayollari AS in Turkish, currently serves 24 domestic and 38 foreign routes and carried 11.3 million passengers in 2011. It’s considering an initial public offering for 2013 or 2014, Sabanci said.

To contact the reporters on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net; Robert Wall in London at rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net; Chad Thomas at cthomas16@bloomberg.net

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