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Turkish Air Leans Toward Superjumbo Deal After Years of Stalling

July 16 (Bloomberg) -- Turkish Airlines said it’s likely to decide in favor of purchasing superjumbo aircraft such as the Airbus Group NV A380 as the fast-expanding carrier seeks to resolve years of debate on the issue by the year’s end.

The carrier is leaning toward adding a bigger wide-body model and will reach a decision after addressing final technical issues, including capacity limitations at its Istanbul hub, Chairman Hamdi Topcu said today in an interview, adding that the latest version of Boeing Co.’s 747 jumbo remains in the running.

“Turkish Airlines is on the lookout for ultra wide-body planes such as A380s because the company has reached the network capacity to fly them,” Topcu said. “We haven’t come to a conclusion about which is more suitable for our network yet, but we are trying to make a decision as soon as possible.”

Turk Hava Yollari AO, as the carrier is officially known, has been wrestling with the question of whether to add Airbus double-deckers for at least five years, with Topcu having said in April 2013 that a decision would be reached that year.

There’s no concern about over-capacity, Temel Kotil, the carrier’s chief executive officer, said separately in an interview at the Farnborough Air Show, adding that occupancy levels have jumped from 65 percent to 90 percent in a decade even with seating increasing at an 18 percent annual rate. “It’s a problem for some airlines, but not us,” he said.

Direct Deal

Turkish Airlines stands alone among major long-haul carriers in Europe and the Middle East in failing to find room for the A380, though the superjumbo has been ordered in relatively small numbers by several network operators.

Gulf airlines, with which the company is competing as it establishes Istanbul as an intercontinental transfer hub, have taken differing views on the model, with Qatar Airways Ltd. and Etihad Airways PJSC ordering 10 jets apiece, in contrast with Dubai-based Emirates, which is taking at least 140 aircraft.

Turkish Airlines will assess its requirement at boardroom level and “make a decision by the end of the year,” Topcu said in the interview in London after attending the Farnborough expo southwest of the U.K. capital.

The chairman said that while his company will consider what mode of acquisition represents the best value, it favors direct purchases from Airbus and Boeing. An outright deal for the A380 or 747-8 would come as a blow to Mark Lapidus, CEO of lessor Amedeo, who wants to place 20 A380s with airlines.

A330neo Evaluated

Turkish Airlines is continuing to assess its requirements for mid-size and large wide-bodies for delivery from 2017, with the Boeing 787 Dreamliner, Boeing 777X and Airbus A350 all under consideration, along with the re-engined Airbus A330neo launched at the Farnborough event this week, Topcu said.

“We will make a decision about this in the coming months,” he said. The carrier has 47 wide-bodies jets now, with 20 current-model A330s and 20 777-300s on order.

Topcu said he’s held discussions with Deutsche Lufthansa AG CEO Carsten Spohr about expanding leisure venture SunExpress to add low-cost long-haul flights, though the German executive hasn’t presented any firm proposals. The plan would go before the board for an assessment of its benefits for Turkish Airlines, he said.

Previous plans for closer cooperation between the Star Alliance members failed in 2013 when Lufthansa sought to pare passenger rewards for Turkish Air clients on code-share flights.

To contact the reporters on this story: Firat Kayakiran in London at fkayakiran@bloomberg.net; Christopher Jasper in London at cjasper@bloomberg.net

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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