Turkish Airlines’ large aircraft order has been further delayed and will be made in the upcoming months, Turkish Airlines Chairman Ahmet Bolat confirmed to CEO talks.
In the meantime, the Star Alliance member has agreed to lease 34 aircraft from AerCap, including three Boeing 787-9s, 25 737 MAX 8s and lease extensions on six current Airbus A330-200s.
“The recent lease contract that we announced is in line with our strategic target of reaching 800 aircraft by 2033. Considering the size of our intended order and OEM’s current slot availability, we are trying to secure our growth in the best possible way.”
Turkish Airlines Chairman Ahmet Bolat
Regarding the latest lease announcement, AerCap said deliveries from the latest deal with Turkish are scheduled to begin in 2024 and continue through 2026.
P&W Geared Turbofan Engine Issue
When queried about the number of aircraft leases Turkish needs to extend to ensure it has enough capacity given supply chain constraints, Bolat said, “This depends on the number of production slots made available and their [suppliers] timetable along with the developments about the Pratt and Whitney GTF [Geared Turbofan Engine] problem.”
Turkish Airlines needs to take production delays into account as well. “Clearly, several unknowns prevent us from speaking about a precise number. Right now, it is possible to say that we are not far away from our 2024 capacity growth target,” the chairman said. “We are going to provide more details when we announce the next year’s guidance at the end of this year.”
Future Aircraft Order
Regarding a possible update from Turkish Airlines on the future aircraft order, Bolat said,
“As you are well aware, current production rates are not sufficient to cover the sizable backlog that the manufacturers have. Our intention to order up to 600 aircraft is a very large-scale one and has a lot of moving parts. If you add the recent engine problems into the equation things get complicated.”
Turkish Airlines Chairman Ahmet Bolat
Given the close relations that Turkish Airlines has with both of the OEMs [Airbus and Boeing], its negotiations continue in a positive tone.
“For the last couple of months, we have been working on optimizing the order structure in terms of aircraft and engine types and more importantly what kind of a maintenance contract to get in addition to it,” Bolat said.
“That’s the reason why we have not announced any decision yet. Hopefully, we will be able to disclose the result of the tender in the upcoming months,” he added.
As you can see in their 2022 annual financial report, they have a “natural hedge” of foreign currency expenses (lease payments, fuel) with foreign currency revenue (ticket and cargo sales abroad). Therefore they are relatively little affected by the macroeconomic situation of Turkey.
The entire Turkish economy is a house of cards, with artificially low interest rates that encourage massive over-investment in capital goods. We’ve seen this show before in Kingfisher, Hainan, and AirBerlin.
1. Interest rate in Turkey is over 30%. 2. THY is not the likes of Kingfisher or Hainan
Interest rates in Turkey right now are high not low as your statement claims. Plus you can’t compare those airlines to THY, they never had the infrastructure, passenger numbers or route networks.