Turkish Air Said to Consider Leasing A380s From Malaysia Air

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Malaysian Airlines A380 Aircraft
A Malaysia Airlines System Bhd. A380 aircraft, produced by Airbus Group NV takes-off from Heathrow airport's Terminal 4 in London, on July 18, 2014. Turkish Airlines is considering leasing two Airbus A380 superjumbos from Malaysia Airlines. Photographer: Chris Ratcliffe/Bloomberg

Turkish Airlines is considering leasing two Airbus A380 superjumbos from Malaysian Airline System Bhd., giving the rapidly expanding carrier a test run at flying the world’s largest airliner, according to people familiar with the plan.

Senior management will ask for approval from the board in coming days to enter formal talks with Malaysia Airlines, said one of the people, who asked not to be identified because the deliberations are private. Malaysia Airlines, which operates six A380s, no longer needs the capacity, another person said.

Offloading parts of its A380 fleet would help Malaysia Airlines in its efforts to rescale its business after two aircraft disasters last year. Turkish Airlines is among the fastest growing carriers in the world and so far doesn’t operate the double-decker, which could support the flag carrier’s push to establish its Istanbul base as a transfer hub for travel between Europe and the U.S. and Asia, mirroring the strategies of top Persian Gulf carriers located further southeast.

A spokesman for Turk Hava Yollari AO, as Turkish Airlines is formally known, declined to comment, as did a spokeswoman for Toulouse, France-based Airbus Group NV.

‘Exploring’ Options

“Following Malaysia Airlines’ restructuring announcement, the national carrier is exploring new ways to reposition itself as a stronger and more sustainable airline for the future,” the Subang-based carrier said in a statement. “However, the airline is unable to confirm on the matter as the business plan has yet to be finalized.”

Turkish Airlines rose as much as 1.2 percent and was trading up 0.9 percent at 9.35 liras as of 11 a.m. in Istanbul. Airbus was 0.1 percent higher at 50.72 euros in Paris. Malaysia Airlines is controlled by sovereign-wealth fund Khazanah Nasional Bhd.

Turkish Airlines is expanding its fleet at a rate of almost three planes a month after ordering 117 aircraft from Airbus and 95 from Boeing Co. Focusing on higher frequencies has meant that until now Turkish wasn’t ready to take on high-capacity planes, though a chance to lease a small number of A380s, without the commitment to purchasing, would allow the carrier to test whether it has sufficient demand.

Malaysia Airlines is looking to lease out the superjumbos because traffic has waned following two disasters last year. In early 2014, a Malaysia Airlines Boeing 777 disappeared, and no trace of the plane has been found to date, with all occupants officially declared dead. In July, another 777 crashed in Ukraine following a suspected missile attack, also killing everyone on board.

A380 Orders

For Airbus, which has struggled to find new customers for the A380, even a small lease agreement involving the large plane would offer a respite, as it would give a fast-growing airline the chance to assess the model with a view toward possibly buying or leasing more in the future.

Airbus has failed to find a new airline buyer for the A380 since 2013. Its only purchaser in 2014 was a leasing company, Amedeo, that has yet to line up a single carrier to take any of the 20 it ordered.

Leasing a plane from another company typically comes in two forms. A dry lease would hand over the Malaysia A380s to Turkish but require the new operator’s pilots and flight attendants to get trained to work on the plane. A so-called wet lease would include trained pilots and flight attendants.

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